DECISION POINT
OVERVIEW OF MARKET FUNDAMENTALS
Friday  6/14/2013


*************************** S&P 500 FUNDAMENTALS ****************************

The real P/E for the S&P 500 is based on "as reported" or GAAP earnings
(calculated using Generally Accepted Accounting Principles), and it is the
standard for historical earnings comparisons. The normal range for the GAAP
P/E ratio is between 10 (undervalued) to 20 (overvalued).

Market cheerleaders invariably use "pro forma" or "operating earnings,"
which exclude some expenses and are deceptively optimistic. They are
useless and should be ignored.

The following are the most recently reported and projected twelve-month
trailing (TMT) earnings, quarterly earnings, and price/earnings ratios (P/Es)
according to Standard and Poors.

                                             Est       Est       Est       Est
                               2012 Q4   2013 Q1   2013 Q2   2013 Q3   2013 Q4
TMT P/E Ratio (GAAP).......:     18.80     18.60     17.60     16.40     15.20
TMT P/E Ratio (Operating)..:     16.80     16.50     16.30     15.70     14.80

TMT Earnings (GAAP)........:     86.51     87.69     92.19     99.09    107.18
TMT Earnings (Operating)...:     96.82     98.32     99.58    103.44    109.69

QTRLY Earnings (GAAP)......:     20.65     24.21     26.12     28.11     28.74
QTRLY Earnings (Operating).:     23.15     25.74     26.69     27.86     29.40

For a more thorough discussion of earnings and other fundamentals
click here.

Based upon projected GAAP earnings the following would be the approximate
S&P 500 values at the cardinal points of the normal historical value range.
They are calculated simply by multiplying the GAAP EPS by 10, 15, and 20:

                                             Est       Est       Est       Est
                               2012 Q4   2013 Q1   2013 Q2   2013 Q3   2013 Q4
Undervalued (SPX if P/E = 10):     865       877       922       991      1072
Fair Value  (SPX if P/E = 15):    1298      1315      1383      1486      1608
Overvalued  (SPX if P/E = 20):    1730      1754      1844      1982      2144


*******************  COMPARISON OF MAJOR INDEXES  ***************************

                                  SPX     OEX     NDX    DJIA    DJTA    DJUA

Price/Earnings Ratio........:      19      19      21      17      22      21
Dividend Yield..............:    2.0%    1.8%    0.7%    2.6%    1.4%    4.0%


*********************** DIVIDEND VALUE RANGE ANALYSIS ***********************

The yield for the DJIA, DJTA and the S&P 500 has historically moved
between a range of 3% (overvalued) and 6% (undervalued). The normal yield
range for the DJUA is between 3% and 12%. Decision Point expresses this
range as an RVR (Relative to Value Range) value of between 0 (undervalued)
and 100 (overvalued). Values can fall outside that range, and, when they
do, indicate even greater extremes of market valuation.


                                     S&P 500     DJIA     DJTA    *DJUA
-----------------------------------  -------    -----    -----    -----
Current Closing Price.............:     1627    15070     6309      485
Current Yield.....................:     2.0%     2.6%     1.4%     4.0%
Current P/E.......................:       19       17       22       21
Current Payout Ratio..............:      0.4     39.2      0.3      0.8
Current RVR.......................:      134      115      153       89

Price at  1.5% Yield..............:     2169    26121     5888     1293
Price at  3.0% Yield (RVR 100)....:     1085    13061     2944      647
Price at  4.0% Yield..............:      814     9796     2208      485
Price at  5.0% Yield..............:      651     7836     1767      388
Price at  6.0% Yield  (RVR 0).....:      542     6530     1472      323
Price at  8.0% Yield..............:      407     4898     1104      243
Price at 12.0% Yield  (RVR 0 - DJUA).........................:      162


*********************** MISCELLANEOUS MARKET MEASURES ***********************

DJIA Yield.............:    2.55%  Bearish  (Norm Rng: 3% - 6%)

DJIA P/E...............:    16.58  Neutral  (Norm Rng: 10 - 20)

T-Bill Yield/DJIA Yield:     0.02  Bullish  (Norm Rng: 1.6 - 2.0)

Price to Dividend Ratio:    39.22  Bearish  (Should be less than 30)


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The chart below offers perspective regarding current S&P 500 P/E and yield
relative to normal historical ranges.





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HUSSMAN P/E

The chart beloww calculates the SPX P/E by dividing the SPX price by Prior
Peak Earnings, a method developed by John Hussman, manager of the Hussman
Funds. (hussmanfunds.com) It orients valuations to the long-term
rising trend of earnings growth as defined by peak-to-peak earnings.





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End of MARKET FUNDAMENTALS REPORT for Friday  6/14/13

Copyright 2013 Decision Point.