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Dow Trend Earnings (aka Fed model)

Credit for the chart below goes to  Mike Susak of La Jolla Trading, Inc. (West Coast Options Fund, L.P.) (Any errors and omissions are mine)
How to read the chart below?
Premise: $100  yielding 5% in Bonds=$5, and $100 invested in a Company with a P/E (Price/Earnings)of 20=$5 - is the same thing.
Example: On 10/21/02 the Dow's 52 week earnings = $389 & 10 Year T-Note = 4.13%  Based on the chart below, the DJIA should be trading between 9262 and 9725. Why are we are trading at 8323? These are "trailing" earnings - and the future for Dow earnings is always uncertain (RISK & FEAR premium).Ten Year T-Notes are guaranteed.
The current numbers as of Nov. 30, 2014  are $1138.93 in  Earnings and Ten Year Notes have a yield of  2.36%
After rounding things up and down a bit - the Dow should be trading at $48220









Notes & Links                                                       

____________________________________________________
 
Risk / Fear Premium
 
Date:
Dow
Earnings:
Ten Year Notes yield:
Dow "should be" trading at:
Dow "is" trading at:
Risk / Fear Premium:
Nov. 30
2014
1138.93
2.36
48220
17828
-30392
Jan. 3 2014
1045.43
3.0
34833
16470
-18363
June 18
2013
937.6
2.12
44226
15318
-28908
Sep 28 2012
909.97
1.66
54817
13437
-41380
Jan 3 2012
924.53
2.02
45769
12397.38
-33372
Sep 2
2011
896.38
2.28
32298
11240
-21058
June 22
2011
878.99
2.97
29596
12190
-17406
Dec. 31 2010
784.31
3.36
23333
11577.51
-11756
Sep. 27
2010
714.17
2.54
29173
10860
-18313
May 28
2010
687.81
3.23
21269
10136
-11133
Dec. 12
2009
576.41
3.49
16516
10471
-6045
Sep. 14
2009
619.79
3.47
18446
9626
-8820
June 15
2009
686.52
3.7
18555
8799.26
-9756
Apr. 13
2009
293.42
2.95
9946
8083.38
-1863
Jan. 5 2009
487.84
2.18
21927
9034.69
-12893
Nov 8
2008
477.97
3.96
11312
8943
-2369
June 31 2008
147.63
4.09
3607
11288
+7681
Mar 31
2008
237.72
3.39
7012
12216.4
+5204
Dec 29
2007
283.62
4.23
6714
13365.87
+6651
Aug 31 2007
830.94
4.60
18065
13357.74
-4708
Mar 30
2007
729.18
4.60
15848
12354.35
-3494

Dec 31
2006
571.84
4.70
12167
12463
+296
June 5
2006
532.85
5.05
10657
11048.72
+391
Dec. 26
2005
568.59
4.44
12793
10883.27
-1910
Aug. 14, 2005
581.69
4.23
13,735
10,600
-3135
Jan. 31, 2005
600.65
4.13
14,528
10,489
-4039
Oct. 24,  2004
583
3.98
14,630  
9,944
-4686
Oct. 21, 2002
389
4.13
9,419
8,323
-1096