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*                         2/10     2/17     2/24     3/3/25
S&P 500 Index             6025.99  6114.63  6013.13  5954.50
Trailing 12 month PE      28.22    28.41    27.82    27.59
Trail Earnings yield      3.54%    3.52%    3.59%    3.62%
Forward 12 month PE       23.77    23.93    23.45    23.13
Fwd Earnings Yield        4.21%    4.18%    4.26%    4.32%
90 day tbill yield        4.35     4.34     4.32     4.32
10 year tbond yield       4.49%    4.47%    4.42%    4.24%
Arezi Ratio               1.23     1.23     1.20     1.19
Fed Ratio                 1.07     1.07     1.04     0.98

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 Nov-Apr part of the year. - Bullish
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 40%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 84%.

Elan

Note that the yield curve, the ratio of short and long term treasuries (3 month vs. 10 year) has become slightly inverted. This time it's not because the Fed has raised short term interest rates - it has not. It's because the yield on 10 year treasuries has dropped - 0.53% in the last seven weeks. It's a warning signal for a possible recession.

Elan

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