*                         7/8      7/15     7/22     7/29
S&P 500 Index             5567.19  5615.35  5505.00  5459.10
Trailing 12 month PE      28.44    28.51    27.93    27.59
Trail Earnings yield      3.52%    3.51%    3.58%    3.61%
Forward 12 month PE       23.63    23.59    23.21    23.04
Fwd Earnings Yield        4.23%    4.24%    4.31%    4.34%
90 day tbill yield        5.46     5.43     5.43     5.38
10 year tbond yield       4.28%    4.18%    4.25%    4.20%
Arezi Ratio               1.55     1.55     1.52     1.49
Fed Ratio                 1.01     0.99     0.99     0.97

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 46%
stocks, 54% 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 inverted. - Bearish

A composite allocation may start with the Arezi formula and subtract 10%
for each bearish indicator. The current target allocation is 16%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 65%.

Elan

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