Screaming Buy on the S&P 500 fundamentally?

Discussion in 'Technical Analysis' started by ARogueTrader, Mar 27, 2004.

  1. From a yield perspective, the S&P 500 is a screaming long term buy:


    S&P 500 Earnings Yield vs. Treasury-Bill Yield

    Description | Calculation | Strategy | View Chart

    Time Frame: Long
    Category: Fundamental


    The S&P Earnings Yield is the prior 12 months' earnings of the S&P 500 Index as a percentage of its cash price. This is a method of establishing a measure of valuation for the actual earnings generated by the market. A higher earnings yield suggests the market is at a better fundamentally valued level than a lower earnings yield. This indicator calculates this fundamental value relative to monetary investments to create a measure of the relative attractiveness of holding stocks versus fixed income instruments.

    Calculation & Significant Levels

    S&P 500 Earnings Yield vs. T-Bill Yield: Three-month T-Bill yield divided by the S&P 500 Earnings Yield. Above 1.1 is considered bearish and below .9 is bullish.

    Formula: (T-Bill Yield)
    (S&P 500 Earnings) / (S&P cash index price)
    Gauge Elements: Magnitude
    Updated: Weekly (as of Friday close)


    Historically, when the ratio of the T-Bill yield divided by the S&P 500 earnings yield has risen above 1.1 it has been a noteworthy warning that the market was vulnerable to a correction. When this indicator has been below .9 the market has demonstrated a significant upward bias.
  2. ====================================
    top trader /investorJim Rogers uses fundamentals to trade;
    & I use them for a rough sreeen.

    But as far as putting on a trade/investment strictly off fundamentals;
    i think of Jack Nicholson -One flew over the cucu nest.