December 23, 2017
Welcome to the Bollinger Band Letter Weekly Update for Saturday the 23rd of December 2017.
There is still little difference in performance by stock size or by the growth-versus-value metric.
Our FAANG Index remains stalled with the market moving to new highs. That means that portfolio managers are scrambling to get into the stocks that are currently leading, so the FAANG stocks will likely continue to be a source of funds for a while.
The stock market seems pretty solid from a technical perspective, but it does seem overbought. One indication of this is the low levels of the 10-day Open Arms Index that can be seen in our market-timing chart pack. That suggests a pause to refresh, or perhaps some consolidation into the new year, but we aren't seeing the typical signs that we would expect to see if a top were developing.
Keep in mind that we are entering the best time of the year to own stocks, so in the absence of real technical negativity the default outlook should be for high prices.
One potential problem is rising interest rates, but I think that we have a ways to go yet before interest rates bite. Another is higher energy prices, but they haven't seemed to bother stocks yet either.
Finally, the tax cut package just passed is a huge plus for the economy and stocks.
A note on Bitcoin and the crypto currencies. The sector made a major top and saw a forty plus percent decline before seeing a massive bounce. I think that the most logical sequence is for a retest of the lows and some further consolidation. However, everything in crypto-land seems to go by much faster than in equities, so all that might happen at lightning speed. I remain long-term bullish on the sector, but think that it'll take some time to heal.
I'd like to take this time to wish you and yours a happy Holiday Season. We are past the solstice so our days will start to get longer and lighter again. May you and yours enjoy health and happiness.
With the Value Line Geometric Average at 563.48, the Value Line Plan is in the market with a Friday sell stop of 550.42.
The current allocations are:
50% US stocks, 10% International, 10% Yield and 30% Cash.
There are no changes to the ETF portfolios this week.
The ETF Program portfolio holdings:
Style (21): IUSG, 6, IWF, 2, IWB, 1.
Country (21): EWO, 2, EWJ, 1, EWN, 4.
Sector (27): XLK, 5, IXG, 8, 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