Weekly Update

November 5, 2017

 

Welcome to the Bollinger Band Letter Weekly Update for Sunday the 5th of November 2017.

 

There are several changes to our market timing chart pack this week, three new charts and one new indicator. The three charts are the Russell 1000, 2000 and 3000, each accompanied by its own advance-decline line in the indicator clip. These a-d lines are known as operating company only versions and can be quite useful. (The 1000 is a large-cap index, the 2000 is a small cap index and the 3000 is a blend of the two.) The new indicator can be found on the High Low Logic Index Chart and is a de-optimized version of the Hindenburg Omen that uses only daily data. I'll discuss these additions in-depth in the November letter, which will be will be posted next Saturday. It is early this month as I will be traveling to Japan mid-month.

 

Interest is swinging back towards large-cap stocks at the expense of small-cap stocks, which feels mainly like some small-cap profit taking. The tilt towards growth continues, which makes sense, as at these valuation levels you need growth to justify owning stocks. Our FAANG Index is trading at a new high, confirming the interest in large-cap growth.

 

From an internal perspective, we are starting to see some weakening from some technicals. The a-d lines for large-cap stocks have flattened and the a-d lines for smaller stocks have actually turned down. Some topping patterns are evident and new lows are starting to build up a bit. Nothing serious yet, but it is a clear change from the monotonic strength we were seeing.

 

Finally, the VIX closed below 10 Friday, an indication of complacency, so the stage is set for a volatility expansion.

 

There were no changes to the ETF portfolios this week. IXJ, fell to a rank of 14, which is on the cusp so there is a good possibility it'll be replaced soon.

 

With the Value Line Geometric at 540.13, the Value Line Plan is in the market with a Friday sell stop of 533.13.

 

The current allocations are:

50% US stocks, 10% International, 10% Yield and 30% Cash.

 

The ETF Program portfolio holdings:

Style (21): IUSG, 3, IWF, 1, IWB, 4.

Country (21): EWO, 8, EWI, 9, EWN, 5.

Sector (27): IXJ, 14, IGV, 4, PSJ, 3.

 

Details on our Allocations, Ice Breaker and our ETF portfolios can be found here:

https://www.bollingerbands.com/bb-letter/

 

Until next time, I wish you well.

 

John Bollinger, CFA, CMT

 

Copyright 2017 by Bollinger Capital Management

 

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