*                         10/5     10/12    10/19    10/26/26
S&P 500 Index             7722.72  7811.54  7659.44  7623.68
Trailing 12 month PE      26.15    26.50    26.42    26.15
Trail Earnings yield      3.82%    3.77%    3.79%    3.82%
Forward 12 month PE       18.93    19.17    18.94    18.65
Fwd Earnings Yield        5.28%    5.22%    5.28%    5.36%
90 day tbill yield        4.19     4.25     4.26     4.22
10 year tbond yield       5.28%    5.24%    5.09%    5.00%
Arezi Ratio               1.10     1.13     1.12     1.10
Fed Ratio                 1.00     1.00     0.96     0.93

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 65%
stocks, 35% 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 45%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 77%.

Elan