Welcome to John Bollinger's Capital Growth Letter Hotline for Monday the 27th of March 2017.
Like it or not, believe it or not, this is a market that simply does not want to go down. Correct? Certainly sir! Something more serious? No sir! Two recent tests point up this idea. The failure of the health care reform effort, which should have caused enough uncertainty for a strong decline, and today's reversal from a big loss to unchanged plus, which points up the appetite for stocks.
Large-cap growth continues to outperform and we see that as the current leadership. It is not that we think smaller stocks should be avoided; it is just that a normal leadership rotation is favoring growth in larger stocks at present. In a longer term sense we still favor the mid-cap sector and smaller stocks.
We remain constructive on stocks, believing that the path of least resistance is higher over the intermediate term.
There is one change to the ETF portfolios this week; sell EWA and buy EWP, a switch from Australia to Spain.
There are no changes to the Core portfolios this week.
The automated Ice Breaker reports are up and running. This is a new system, so there might be some timing issues, but as of now they seem to be working as expected. Ice Breaker has four open positions, one in DIA, two in QQQ and one in SPY. I am running an Ice Breaker expansion experiment with IJR (small stocks) and MDY (mid-cap stocks), each has three positions open.
The Value Line Plan exited the market on Friday. This feels like another signal that should be over-ridden, a review is underway. QQQ has the best record over the past two years with MDY in second place.
Be careful out there!
The Value Line Plan is out of the market with a Friday buy stop of 519.24.
The Value Line Geometric Index stands at 511.83.
The current allocations are:
70% US stocks, 10% International, 10% Yield and 10% Cash.
The ETF Program portfolio holdings:
Style (21): IUSV, 9, IWF, 1, IWB, 5.
Country (21): EWO, 5, EWP, 1, EWT, 4.
Sector (27): XLK, 1, IXG, 5, SOXX, 3.
Details on our Allocations, Ice Breaker and our ETF portfolios can always be found on the Capital Growth Letter web site. https://www.bollingerbands.com/bb-letter/ This is a new address. On the right side of the page there are quick links to the various sections.
Until next time, I wish you well.
John Bollinger, CFA, CMT
Copyright 2017 by Bollinger Capital Management