*                         7/15     7/22     7/29     8/5
S&P 500 Index             5615.35  5505.00  5459.10  5346.56
Trailing 12 month PE      28.51    27.93    27.59    27.03
Trail Earnings yield      3.51%    3.58%    3.61%    3.70%
Forward 12 month PE       23.59    23.21    23.04    22.55
Fwd Earnings Yield        4.24%    4.31%    4.34%    4.43%
90 day tbill yield        5.43     5.43     5.38     5.29
10 year tbond yield       4.18%    4.25%    4.20%    3.80%
Arezi Ratio               1.55     1.52     1.49     1.43
Fed Ratio                 0.99     0.99     0.97     0.86

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 49%
stocks, 51% 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 19%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 67%.

Elan

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