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Here it is.
A few comments/opinions are in order considering the near vertical drop from
well above the regression channel. While the ratio is working as intended, I
think that one needs to apply a bit of interpretation to the components from
which the ratio is derived. TBill rates have fallen from 6.21 to 3.35 (47%)
and the decline appears to be decelerating. SP earnings have dropped from
53.77 peak to 45.44 (15%) and the decline appears to be accelerating
(something under $40 estimated for Q3). SP cash has dropped from 1520 to
1162 (24%). Further, the ratio has trended upward for some 60+ years since
the beginning of my data in 1940 (beginning ratio of 0.0001) and the highs
sharply exceeded the upper bounds of the trend channel. I consider it likely
that the bottom of the channel will not contain the decline. Thus, while the
ratio appears to be reaching the value area, I believe one should look for a
sustained bottoming trend before becoming bullish. My personal view is that
the ratio will ultimately reach the 0.50 level (or lower) because we are
witnessing the end of a secular bull market.
Earl
----- Original Message -----
From: "Howard Hopkins" <hehohop@xxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Sent: Thursday, August 16, 2001 8:05 PM
Subject: Re: [RT] Re: Markets
> Earl,
>
> Could you post a current T-bill/SP earnings chart?
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