No. of Recommendations: 14
* 6/15 6/22 6/29 7/6/26
S&P 500 Index 7431.46 7500.58 7354.02 7483.24
Trailing 12 month PE 32.90 33.21 32.24 32.15
Trail Earnings yield 3.04% 3.01% 3.10% 3.11%
Forward 12 month PE 22.35 22.56 21.17 20.18
Fwd Earnings Yield 4.47% 4.43% 4.72% 4.96%
90 day tbill yield 3.78 3.83 3.83 3.82
10 year tbond yield 4.48% 4.46% 4.38% 4.49%
Arezi Ratio 1.24 1.27 1.23 1.23
Fed Ratio 1.00 1.01 0.93 0.91
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 59%
stocks, 41% cash this week.
Other timing indicators:
The S&P index is above its 200DMA. - Bullish
We are in the May-Oct part of the year. - Bearish
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 39%.
An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 73%.
Elan
