April 17, 2017 Welcome to the Bollinger Band Letter Hotline for Monday the 17th of April 2017.
Our outlook for stocks remains positive despite the long pause the market has taken. Large-cap stocks have been flat since March 1 and the market as a whole stalled all the way back in the second week of December (Value Line Geometric). The interesting part is that there has been virtually no technical deterioration during this consolidation period despite the relative pullbacks in mid-cap and smaller stocks. My friend Mike Moody recently pointed out the High Low Indicator, one of the classic market-timing tools from the golden age of technical analysis, actually turned up in mid March from above the 50 level (30 is oversold) and rallied all the way to 84 (70 is overbought) on April 12th. This market note has focused on the NYSE advance - decline line, which made a new high last Wednesday, and the number of 52-week new lows, which remain quiescent. I do hear all the bearish opinion out there and the depression/anxiety related to the current administration, but from a technical point of view I see no reason to join the bears at this time. Just following the rules, as I have come to understand them, suggests that this is a time to accumulate stocks. I know that advice may be hard to stomach, but that is what the numbers say.
The bottom line is that we are looking for what we know as a re-entry signal, a sign of strength that marks the end of a correction to an impulsive up move. Advice: Keep a shopping list of stocks that you want to own and watch them carefully. When they firm and turn higher check to see if general market action supports and buy them if so. Of course we'll keep you posted on all this.
There is one change to the ETF portfolios this week, sell IXG and buy IGV, which is a switch from global financials to technology (software).
There are no changes to the Core portfolios this week.
Be careful out there!
The Value Line Plan is in the market with a Friday sell stop of 507.75.
The Value Line Geometric Index stands at 513.34.
The current allocations are:
70% US stocks, 10% International, 10% Yield and 10% Cash.
The ETF Program portfolio holdings:
Style (21): IUSV, 11, IWF, 1, IWB, 4.
Country (21): EWO, 5, EWP, 3, EWT, 6.
Sector (27): XLK, 4, IGV, 1, SOXX, 11.
Details on our Allocations, Ice Breaker and our ETF portfolios can always be found online:
Until next time, I wish you well.
John Bollinger, CFA, CMT
Copyright 2017 by Bollinger Capital Management