No. of Recommendations: 17
* 1/5 1/12 1/19 1/26/26
S&P 500 Index 6858.47 6966.28 6940.01 6915.61
Trailing 12 month PE 28.46 28.81 28.15 27.95
Trail Earnings yield 3.51% 3.47% 3.55% 3.58%
Forward 12 month PE 23.91 24.19 23.66 23.38
Fwd Earnings Yield 4.18% 4.13% 4.23% 4.28%
90 day tbill yield 3.65 3.62 3.67 3.70
10 year tbond yield 4.19% 4.18% 4.24% 4.24%
Arezi Ratio 1.04 1.04 1.03 1.03
Fed Ratio 1.00 1.01 1.00 0.99
The Arezi Ratio is the 90 day tbill yield divided by the trailing
earnings yield of the S&P500. A low ratio means that stocks are undervalued.
The 'Fed Ratio' is the 10 year treasury bond yield divided by the
forward estimated operating earnings yield of the S&P500. A low ratio
means that stocks are undervalued. Thus, a ratio of 0.71 for example
means, according to Yardeni, that stocks are cheaper than 'fair value'
by 29%.
The 'S=120-50*Arezi Ratio' formula indicates an allocation of 68%
stocks, 32% cash this week.
Other timing indicators:
The S&P index is above its 200DMA. - Bullish
We are in the Nov-Apr part of the year. - Bullish
The trailing PE ratio of the S&P is above 17. - Bearish
The treasury yield curve is normal. - Bullish
A composite allocation may start with the Arezi formula and subtract 10%
for each bearish indicator. The current target allocation is 58%.
An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 89%.
Elan
