Welcome to John Bollinger's Capital Growth Letter Hotline for Monday the 30th of January 2017.
Last week we were looking for some tough going as Trump got going, and we are getting it. I wrote: 'Emotionally it feels like the stock market is struggling, but that isn't showing up in the numbers'. And while we aren't seeing any real technical deterioration yet, the averages have clearly run into resistance and traders and investors are trying to take stock of what is actually happening. Trump is clearly the most independent (in the sense of political party loyalty) president we have had, which means that figuring out where we are going is going to be harder than ever. We are still constructive on the stock market, but the going will be bumpy. There is a silver lining here, opportunities in individual stocks pulling back to logical places abound.
This week ought to be important and if there is to be real trouble it should start to show up in the market internals. This may be a good month to publish the letter early again, perhaps on the 11th. Two weeks should be enough time to get a good view of any changes in the internal condition of the market.
In GroupPower, the Industry sector sports a classic Wyckoff breakout and pullback pattern as does Technology. In fact many sectors are setting reentry buy patterns. Bowing to market trends, we have added a new industry group, Cannabis. It only has six stocks as of today, but that'll be 15 by the end of the week. It is on the Consumer Noncyclical sector.
There are two changes to the ETF portfolios this week, sell IWN and buy IWB, which is a switch from small-cap value to large cap; sell EWI and buy EWG, which is a switch from Italy to Germany.
Part two of the MTA's Wyckoff webinar it is now scheduled for February 15th.
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 511.04.
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, IWB 1
Country (21): EWO 1, RSX 2, EWG 3
Sector (27): IGN 10, IXG 1, SOXX 2
Until next time, I wish you well.
John Bollinger, CFA, CMT
Copyright 2017 by Bollinger Capital Management