No. of Recommendations: 15
* 10/13 10/20 10/27 11/3/25
S&P 500 Index 6552.51 6664.01 6791.69 6840.20
Trailing 12 month PE 28.14 28.59 29.07 29.22
Trail Earnings yield 3.55% 3.50% 3.44% 3.42%
Forward 12 month PE 24.24 24.54 24.92 25.02
Fwd Earnings Yield 4.13% 4.08% 4.01% 4.00%
90 day tbill yield 4.02 4.00 3.93 3.89
10 year tbond yield 4.05% 4.02% 4.02% 4.11%
Arezi Ratio 1.13 1.14 1.14 1.14
Fed Ratio 0.98 0.99 1.00 1.03
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 63%
stocks, 37% 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 53%.
An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 86%.
Elan
