No. of Recommendations: 18
* 12/8 12/15 12/22 12/29/25
S&P 500 Index 6870.40 6827.41 6834.50 6929.94
Trailing 12 month PE 28.62 28.38 28.45 28.78
Trail Earnings yield 3.49% 3.52% 3.51% 3.47%
Forward 12 month PE 24.47 24.24 24.07 24.32
Fwd Earnings Yield 4.09% 4.12% 4.16% 4.11%
90 day tbill yield 3.71 3.63 3.62 3.64
10 year tbond yield 4.14% 4.19% 4.16% 4.14%
Arezi Ratio 1.11 1.06 1.03 1.05
Fed Ratio 1.01 1.02 1.00 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 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
