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
Description
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)
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(S&P 500 Earnings) / (S&P cash index price)
Gauge Elements: Magnitude
Updated: Weekly (as of Friday close)
Strategy
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.
S&P 500 Earnings Yield vs. Treasury-Bill Yield
Description | Calculation | Strategy | View Chart
Time Frame: Long
Category: Fundamental
Description
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)
Strategy
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.
