May 8, 2017
Welcome to the Bollinger Band Letter Hotline for Monday the 8th of May 2017.
For the first time in a long while I am starting to worry--just a bit--about the market. The rub is the recent surge in NYSE New Lows. It was not enough to trigger a sell or push any of our key indicators into negative territory, but it was enough to get my attention. However, earnings season has been positive on balance, monetary growth is positive, and the other internal market indicators are still strong. Should new lows subside and new highs expand again, we will move on, but for now we are being watchful.
Technology, Healthcare, Basic materials and Consumer Cyclical are the strong sectors. I know that I have a weak spot for Basic Materials, so I won't get too excited about them, but the chart does look like a positive continuation pattern. One sector chart that looks particularly attractive is the Pharmaceutical, Biotech and Life Sciences. We just sold IYH for underperformance and are looking for a better vehicle to participate. I am thinking it should be IBB, the Biotech ETF.
Clearly the place to be at present is in growth with an emphasis on mid-cap and larger stocks.
If you need additional equity exposure, consider the Vanguard Growth Funds, VUG.
We remain constructive on stocks, but alert. No need for defense yet, just watching carefully.
There is one change to the ETF portfolios this week, sell EWT and buy EWN. That is a move from Taiwan to the Netherlands.
There are no changes to the Core portfolios this week.
I will be out of the office for a week. I am travelling to Japan to present a talk to the Nippon Technical Analysis Association. We'll maintain touch via email, but the office will be closed.
Be careful out there!
The Value Line Plan is in the market with a Friday sell stop of 511.46.
The Value Line Geometric Index stands at 522.63.
The current allocations are:
70% US stocks, 10% International, 10% Yield and 10% Cash.
The ETF Program portfolio holdings:
Style (21): IUSG, 3, IWF, 1, IWB, 4.
Country (21): EWO, 3, EWP, 1, EWN, 2.
Sector (27): XLK, 2, IGV, 1, SOXX, 9.
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