July 8, 2017
Welcome to the Bollinger Band Letter Hotline for Saturday the 8th of July 2017.
We are in the midst of a rotational stock-market correction. One way to see this is to note that the S&P 500 is basically unchanged for five weeks, while in the same time period a leadership stock like Telsa, TSLA, fell 20% before finding support at a logical place. I have always thought that one of the most interesting market phenomenons is the ability of the market to relieve the overbought conditions of the leaders without doing damage to the market as a whole. In a rotational correction, money moves from sector to sector, group to group and stock to stock, but is not taken out of the market as a whole. Therefore the focus can change while the average price remains unchanged. Sometimes rotational corrections finish with a price correction, but you can't count on that. Many a portfolio manager has been left behind by the market expecting a price correction that never materialized.
There is a Bollinger Band Squeeze underway in the S&P 500 so we are looking for an expansion of volatility. The trading pattern isn't very bullish, but stock market internals are still solid so the odds suggest an up move out of the Squeeze. Intraday intensity is positive and increasing for SPY, the S&P 500 ETF, which also suggests a positive resolution. (The Squeeze peaked on June 28th, so compression is starting to bleed off.)
This week's Market Timing Charts have been posted. Comments and suggestions for additional content are welcome: firstname.lastname@example.org
The Value Line Program is in the market with a Friday sell-stop of 511.98. The Value Line Geometric Index stands at 520.26.
The current allocations are:
70% US stocks, 10% International, 10% Yield and 10% Cash.
There are no changes to the ETF portfolio this week.
The ETF Program portfolio holdings:
Style (21): IUSG, 3, IWF, 2, IWB, 4.
Country (21): EWO, 1, EWP, 6, EWN, 2.
Sector (27): IXJ, 2, IGV, 7, IXG, 1.
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