December 16, 2017
Welcome to the Bollinger Band Letter Weekly Update for Saturday the 16th of December 2017.
There is little difference between the performance of stocks by size. History suggests that smaller stocks should lead early in 2018, but there is no sign of that leadership emerging yet. There is a slight tilt towards growth, but the trend is weak. Our FAANG Index continues to lag the market; it looks like that particular mania has run its course and managers are looking elsewhere for growth. Our outlook for stocks remains positive. The rally is in good, if not outstanding, shape and we see no signs of serious deterioration in market health.
Interest rates continue to move higher with the five-year Treasury at a seven year high. This will become a problem someday, but not yet. Confirming this trend M2 growth has slowed to 4.6%, which is still high relative to inflation and relative to long-term history, but low compared to recent history. We need to keep a close watch here, as tighter monetary policy will likely be the next big problem for the economy and the markets.
We intend to spend this week working on new stock ideas, both for the Bounce and for the longer-term.
Bitcoin keeps making new highs, defying the skeptics. The CME futures contract launches tomorrow night. Can ETFs be far behind?
With the Value Line Geometric Average at 557.14, the Value Line Plan is in the market with a Friday sell stop of 544.16. Yes, those are the same numbers from the 12/2 report, just a coincidence.
The current allocations are:
50% US stocks, 10% International, 10% Yield and 30% Cash.
There is one change to the ETF program this month, sell EWI and buy EWJ, which is a switch from Italy to Japan.
The ETF Program portfolio holdings:
Style (21): IUSG, 3, IWF, 4, IWB, 2.
Country (21): EWO, 12, EWJ, 1, EWN, 5.
Sector (27): XLK, 3, IXG, 4, XLY, 1.
Details on our Allocations, Ice Breaker and our ETF portfolios can be found here:
Until next time, I wish you well.
John Bollinger, CFA, CMT
Copyright 2017 by Bollinger Capital Management