DECISION POINT
OVERVIEW OF MARKET FUNDAMENTALS
Friday  7/18/2008


*************************** 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 Principals), 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).

Standard & Poors has introduced a version called "core" earnings, which is
more critical than GAAP and will probably become the standard in the future.

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 and price/earnings ratios (P/Es) according to
Standard and Poors.

                                             Est       Est       Est
                               2008 Q1   2008 Q2   2008 Q3   2008 Q4
TMT P/E Ratio (GAAP).......:      20.9      22.7      21.1      17.5
TMT P/E Ratio (Core).......:      17.8       N/A       N/A       N/A
TMT P/E Ratio (Operating)..:      16.4      16.9      16.4      14.5

TMT Earnings (GAAP)........:     60.39     55.42     59.79     72.01
TMT Earnings (Core)........:     70.80       N/A       N/A       N/A
TMT Earnings (Operating)...:     76.77     74.39     76.87     86.71

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

Based upon the latest 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:

Undervalued (SPX if P/E = 10):    604
Fair Value  (SPX if P/E = 15):    906
Overvalued  (SPX if P/E = 20):   1208


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

                                  SPX     OEX     NDX    DJIA    DJTA    DJUA

Price/Earnings Ratio........:      21      20      34      91      15       D
Dividend Yield..............:    2.3%    2.0%    0.4%    2.8%    3.3%    ----


*********************** 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.............:     1261    11497      493       60
Current Yield.....................:     2.3%     2.8%     1.4%     3.3%
Current P/E.......................:       21       91       30       15
Current Payout Ratio..............:      0.5     35.8      0.4      0.5
Current RVR.......................:      124      107      153       97

Price at  1.5% Yield..............:     1934    21461      460      132
Price at  3.0% Yield (RVR 100)....:      967    10731      230       66
Price at  4.0% Yield..............:      725     8048      173       50
Price at  5.0% Yield..............:      580     6438      138       40
Price at  6.0% Yield  (RVR 0).....:      483     5365      115       33
Price at  8.0% Yield..............:      363     4024       86       25
Price at 12.0% Yield  (RVR 0 - DJUA).........................:       17


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

DJIA Yield.............:    2.79%  Bearish  (Norm Rng: 3% - 6%)

DJIA P/E...............:    90.98  Bearish  (Norm Rng: 10 - 20)

T-Bill Yield/DJIA Yield:     0.51  Bullish  (Norm Rng: 1.6 - 2.0)

Price to Dividend Ratio:    35.84  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  7/18/08

Copyright 2008 Decision Point.