August 8, 2017
Welcome to the Bollinger Band Letter Special Update for the 8th of August 2017.
Wednesday may have been a classic Wyckoff Upthrust day; we'll need a couple of more days of data to confirm. If so, then it may well have been a peak that sets the stage for a decline into a fall low. If we get confirmation we will go to 50% stocks and 30% cash and perhaps even lower. (If we get a Value Line Plan sell, we will go the 50% immediately.)
Several of you have asked about recommended sells to implement the reduced the allocations recommended in our last update. Aggressive accounts can cut their VXN allocation by half. Others can sell IJR, which is likely to decline more than its brethren. If more cash is needed/wanted, you should turn to EQAL.
A client asks whether this was one of those 'volatility days' I have been talking about. I don't think so. This seemed like a normal rise in the VIX driven by a decline from the highs that retraced the day's gains plus. From an analytical point of view, that actually makes it potentially more important in my view.
I have added my version of Bill Ohama's Titanic Syndrome indicator to page eight of our market timing charts. This indicator looks for 52-week lows to exceed 52-week highs in the region of a new 52-week high for the Dow Industrials. I present Bill's idea as two indicators, an early warning version, "on board" and a confirmation version, "sinking". The early warning version looks at the six prior trading days and the confirmation version look to the succeeding six days plus the analysis day. So, seven days in either direction. 'Sinking' involves a look ahead and that means that signals may appear on the chart up to six days after the fact. Say there is a new 52-week high for the Dow on day 100 and then new lows outnumber new highs on day 103. In that case, a marker will appear over the new high that occurred on day 100 on day 103. That may seem a bit confusing, but if you think about it I think that you will see that it is the sanest way to present the data. A glance at the High Low Histogram at the bottom of the chart will reveal the signal timing clearly.
The last of our market timing data comes in late, so I will post the chart package tomorrow morning.
Our office will be closed Wednesday, Thursday and Friday this week.
With the Value Line Geometric at 521.94, the Friday sell stop is at 517.54.
The current allocations are:
60% US stocks, 10% International, 10% Yield and 20% Cash.
The ETF Program portfolio holdings:
Style (21): IUSG, 4, IWF, 2, IWB, 3.
Country (21): EWO, 1, EWY, 12, EWN, 3.
Sector (27): IXJ, 7, IGV, 6, 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