No. of Recommendations: 15

* 5/27 6/3 6/10 6/17/19
S&P 500 Index 2826.06 2752.06 2873.34 2886.98
Trailing 12 month PE 20.77 20.19 21.07 21.14
Trail Earnings yield 4.81% 4.95% 4.75% 4.73%
Forward 12 month PE 18.04 17.53 18.19 18.28
Fwd Earnings Yield 5.54% 5.71% 5.50% 5.47%
90 day tbill yield 2.35 2.35 2.28 2.20
10 year tbond yield 2.32% 2.14% 2.09% 2.09%
Arezi Ratio 0.49 0.47 0.48 0.46
Fed Ratio 0.42 0.38 0.38 0.38



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 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 67%.

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

Elan
Print the post Back To Top