*                         5/11     5/18     5/25     6/1/26
S&P 500 Index             7398.93  7408.50  7473.47  7580.06
Trailing 12 month PE      31.56    32.30    32.06    32.58
Trail Earnings yield      3.17%    3.10%    3.12%    3.07%
Forward 12 month PE       20.86    22.38    22.52    22.80
Fwd Earnings Yield        4.79%    4.47%    4.44%    4.39%
90 day tbill yield        3.69     3.69     3.68     3.69
10 year tbond yield       4.38%    4.59%    4.56%    4.45%
Arezi Ratio               1.16     1.19     1.18     1.20
Fed Ratio                 0.91     1.03     1.03     1.01

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 60%
stocks, 40% 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 40%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 74%.

Elan

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