Signs at the Bottom

The bottom - or near enough the bottom - of a market cycle theoretically should be easier to call than the top or near top.

The evidence is found in the corporate balance sheets, income statements, P/E ratios, dividend yields, and other quantitative measures.  It is likewise reflected in low ratios for the market as a whole.  The quantitative factors speak for themselves.

The dividend yield on the Dow Jones Industrial Average, for example, usually cycles between a high yield of 6 percent at the market's bottom and a low yield of 3 percent at the top.   The Dow's average dividend yield sometimes stretches beyond these boundaries, but historically this is a trustworthy parameter of undervalue and overvalue.

Dow Dividend Yield

The list is ranked based on dividend yield as of Dec. 31, 2009. As you can see, the dividend yield varies from an attractive 5.9% to 0%.

Here's a bar chart showing the dividend yield of the Top 15: