DECISION POINT
OVERVIEW OF MARKET FUNDAMENTALS
Wednesday  7/1/2009


*************************** 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).

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
                               2008 Q4   2009 Q1   2009 Q2   2009 Q3   2009 Q4
TMT P/E Ratio (GAAP).......:     62.10    134.20   1923.60   -443.90     32.20
TMT P/E Ratio (Operating)..:     18.60     21.50     23.00     23.50     16.60

TMT Earnings (GAAP)........:     14.88      6.88      0.48     -2.08     28.65
TMT Earnings (Operating)...:     49.51     43.02     40.15     39.25     55.61

QTRLY Earnings (GAAP)......:    -23.25      7.54      6.46      7.17      7.48
QTRLY Earnings (Operating).:    - 0.09     10.13     14.15     15.06     16.27

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
                               2008 Q4   2009 Q1   2009 Q2   2009 Q3   2009 Q4
Undervalued (SPX if P/E = 10):     149        69         5         0       287
Fair Value  (SPX if P/E = 15):     223       103         7         0       430
Overvalued  (SPX if P/E = 20):     298       138        10         0       573


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

                                  SPX     OEX     NDX    DJIA    DJTA    DJUA

Price/Earnings Ratio........:      62      25      38      12      12       D
Dividend Yield..............:    2.8%    2.1%    0.5%    3.2%    4.7%    ----


*********************** 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.............:      923     8504      362       46
Current Yield.....................:     2.8%     3.2%     2.3%     4.7%
Current P/E.......................:       62       12       28       12
Current Payout Ratio..............:      1.7     31.6      0.6      0.5
Current RVR.......................:      108       94      124       81

Price at  1.5% Yield..............:     1723    18142      555      144
Price at  3.0% Yield (RVR 100)....:      861     9071      278       72
Price at  4.0% Yield..............:      646     6803      208       54
Price at  5.0% Yield..............:      517     5443      167       43
Price at  6.0% Yield  (RVR 0).....:      431     4535      139       36
Price at  8.0% Yield..............:      323     3402      104       27
Price at 12.0% Yield  (RVR 0 - DJUA).........................:       18


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

DJIA Yield.............:    3.17%  Bearish  (Norm Rng: 3% - 6%)

DJIA P/E...............:    12.31  Bullish  (Norm Rng: 10 - 20)

T-Bill Yield/DJIA Yield:     0.05  Bullish  (Norm Rng: 1.6 - 2.0)

Price to Dividend Ratio:    31.55  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 Wednesday  7/1/09

Copyright 2009 Decision Point.