December 31, 2017
Welcome to the Bollinger Band Letter Weekly Update for Sunday, the 31st of December 2017.
We want to thank you for your continuing patronage and wish you and yours a Happy, Health and Prosperous 2018!
There is little difference in performance by stock size or growth-versus-value, though there may be a small edge for value developing. It appears that the FAANG craze is over; our FAANG index has not made any progress since October 13th. We expect to see new leadership in the coming year and we do not expect last year's trends to extend into 2018. We remain constructive in our outlook for stocks, expecting a bit more consolidation and then positive action. This is the best time of the year to own stocks and the technical condition of the market is still strong. We are short-term overbought, but that means little as we are in the infamous year-end indicator blackout period.
We expect 2018 to be quite a bit different from 2017, with more volatility, more sector rotation and at least the possibility of a top developing later in the year. Interest rates and energy prices will likely be important topics next year and we think that that the tax cut package just passed will have both stimulating and distorting effects on the economy. We expect that the crypto currencies will continue to be an important source of returns for traders, but that the picture will become complex as governments move to gain control of this emerging sector. A client suggests that 2018 could be a good year for commodities and a reader suggests that it could be a good year for energy. We think both are good ideas, though we would not overweight energy as we have done in the past.
With the Value Line Geometric Average at 562.31, the Value Line Plan is in the market with a Friday sell stop of 550.49.
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, 8, IWF, 3, IWB, 1.
Country (21): EWO, 3, EWJ, 2, EWN, 12.
Sector (27): XLK, 7, IXG, 3, XLY, 1.
Details on our Allocations, Ice Breaker positions and ETF portfolios along with our Market Timing Chart Package can be found here:
Until next time, I wish you well.
John Bollinger, CFA, CMT
Copyright 2017 by Bollinger Capital Management