January 6, 2018
Welcome to the Bollinger Band Letter Weekly Update for Saturday, the 6th of January 2018.
2018 started out with a strong move towards large-cap with a small tilt towards growth. This is unusual as smaller stocks are more often the leaders early in the year. The FAANG Index meme is back on, our FAANG index surged strongly to a new high in the first week of 2018. We were looking for new leadership, but it seems like the old leadership is still the best leadership. The stock market remains remarkably strong and we see no reason to worry at present. Internals are vibrant and there are no signs of potential divergences other than bit of under performance by smaller stocks, but even they are doing well. Time to sit back and enjoy the show.
The ability of the market to skip the negative fall seasonality and power its way into the new year is impressive. I know the media is wildly spinning the Trump presidency, but the market is clearly not listening to the Siren's song. Instead the market is listening to a different drummer and seems to be all about policy and economic potential.
Interest rates are continuing higher. I strongly suspect that this will ultimately be the beast that slays the rally, but they are not at levels that the market wants to worry about yet. Here is a link to a chart of the two-year Treasury note rate.
With the Value Line Geometric Average at 573.16, the Value Line Plan is in the market with a Friday sell stop of 559.99.
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, 3, EWN, 10.
Sector (27): XLK, 7, IXG, 4, 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 2018 by Bollinger Capital Management, Inc.