*                         12/31    1/7      1/14     1/21/19
S&P 500 Index             2485.74  2531.94  2596.26  2670.71
Trailing 12 month PE      17.74    18.07    18.53    19.10
Trail Earnings yield      5.64%    5.53%    5.40%    5.24%
Forward 12 month PE       15.91    16.18    16.73    17.34
Fwd Earnings Yield        6.29%    6.18%    5.98%    5.77%
90 day tbill yield        2.40     2.42     2.43     2.41
10 year tbond yield       2.72%    2.67%    2.71%    2.79%
Arezi Ratio               0.43     0.44     0.45     0.46
Fed Ratio                 0.43     0.43     0.45     0.48

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 97%
stocks, 3% cash this week.


Other timing indicators:
The S&P index is below its 200DMA. - Bearish
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 (not inverted). - Bullish

A composite allocation may start with the Arezi formula and subtract 10%
for each bearish indicator. The current target allocation is 77%.

An alternative allocation, using S=120-30*Arezi Ratio and the first
two of the other timing indicators, produces a target of 96%.

Elan