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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (59011)	9/15/2000 11:23:06 PM
From: Stcgg	Respond to of 99985

My Take on the 10 and 30 Yr Treasuries - They are righting themselves due to the perception that inflation exists, but don't tell the BLS.. <gg>' >><<

To: Casaubon who wrote (59011)	9/16/2000 8:40:15 AM
From: OldAIMGuy	Read Replies (1) \| Respond to of 99985

Hi C, I watch the 13 week, 52 week and 30 year coupon rates. The 13 week is still the highest with 52 week and 30 year giving zilch for incentive for the long end. Elaine Garzarelli gave a talk one time on combining "interest rate" with the "P/E" ratio. In that talk (over a decade ago) she explained that the P/E+I almost always added up to about 20 as sort of a "magic number." The variance was quite small. +or- one point was the "neutral range" with anything above 21 being Bearish and under 19 being Bullish. Since I had the data on the 52 week T rate and the Value Line P/E. I tried her concept out with my own spreadsheet. It's become one of the better overall market indicators that I use and gave it the name "Relative Valuation" as the valuation is relative to interest rates. Unfortunately I never found out which interest rate she used or which P/E. On my example, I had data from 1982 on and it has proved to be consistent with her discussion. Using the values I have, the average value is 20.5 and the range is then >21.5-bearish and <19.5-bullish. It's been very good. Current value is 20.14 or neutral. Best regards, Tom