Market Valuation: Back Of The Envelope

Some quick thoughts on the S&P 500 based on Friday's trading close of roughly 800 and using differing levels of combined earnings.

EPS of 50........E.Yield of 6.25%......PE of 16.00..........Possible Valuation Range: 500---800
EPS of 55....... E.Yield of 6.88%......PE of 14.55..........Possible Valuation Range: 550---880
EPS of 60.......E.Yield of 7.50%....PE of 13.34........Possible Valuation Range: 600---960
EPS of 65.......E.Yield of 8.12%....PE of 12.30........Possible Valuation Range: 650-1,040
EPS of 70.......E.Yield of 8.75%....PE of 11.40........Possible Valuation Range: 700-1,120
EPS of 75........E.Yield of 9.38%......PE of 10.67..........Possible Valuation Range: 750-1,200
EPS of 80........E.Yield of 10.0%......PE of 10.00..........Possible Valuation Range: 800-1,280

Shaded areas indicated the most likely earnings range where I think S&P 500 companies will report in 2009.
Earnings range is based on a low of 10 was the indicated number and 16x the indicated number.
EPS=Earnings Per Share.
E.Yield= Earnings Yield-a bond yield substitute and the inverse of a company's PE ratio.
PE=Price to Earnings ratio.

*Long various ETFs related to the S&P 500 for client accounts.