Welcome to John Bollinger's Capital Growth Letter Hotline for Monday the 23rd of January 2017.
We expect some tough going for the markets as the idea of a Trump presidency meets reality. 20,000 for the Dow Jones Industrial Average will remain an important and hard-to-overcome milestone until there is better forward visibility. Emotionally it feels like the stock market is struggling, but that isn't showing up in the numbers. The averages remain within striking distance of their highs, new lows are non-existent, and the advance decline indicators remain as strong as price, if not a touch stronger. I think the real crux of the matter is that we are struggling as a nation, and our corrosive national dialog is coloring many things including our markets. We remain constructive on US stocks, expecting higher prices across the board and renewed leadership from middle-sized and smaller companies. We do note a shift in interest towards growth, which we think is constructive. At valuations levels this high, growth is the game of the game. Transportation, basic materials, telecoms and energy are the strongest sectors, while both consumer sectors along with yield and media are under the most pressure. There is one change to the ETF portfolios this week, sell EWC and buy EWO, which is a switch from Canada to Austria. There were no other changes to the portfolios this week. Be careful out there! The Value Line Plan is in the market with a Friday sell stop of 506.45. The Value Line Geometric Index stands at 508.84. The current allocations are: 60% US stocks, 10% International, 10% Yield, 10% Forex and 10% Cash. The ETF Program portfolio holdings: Style (21): IUSV 1, IJJ 7, IWN 9 Country (21): EWO 1, RSX 5, EWI 4 Sector (27): IGN 9, IXG 1, SOXX 2 Until next time, I wish you well. John Bollinger, CFA, CMT Copyright 2017 by Bollinger Capital Management