No. of Recommendations: 17
* 10/27 11/3 11/10 11/17/25
S&P 500 Index 6791.69 6840.20 6728.80 6734.11
Trailing 12 month PE 29.07 29.22 27.97 27.95
Trail Earnings yield 3.44% 3.42% 3.58% 3.58%
Forward 12 month PE 24.92 25.02 24.37 24.36
Fwd Earnings Yield 4.01% 4.00% 4.10% 4.10%
90 day tbill yield 3.93 3.89 3.92 3.95
10 year tbond yield 4.02% 4.11% 4.11% 4.14%
Arezi Ratio 1.14 1.14 1.10 1.10
Fed Ratio 1.00 1.03 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 65%
stocks, 35% 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 55%.
An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 87%.
Elan
