January 27, 2018
Welcome to the Bollinger Bands Letter Weekly Update for Saturday, the 27th of January 2018.
Last week stock market action was dominated by large-cap growth and a return to the tried and true. Our FAANG index confirmed that idea by ripping out to new highs. While it is true that by many measures the US stock market is overbought, we see no signs of technical deterioration of the sort we would expect to see if a top were forming. We would be much happier if the market were being more democratic, but even mid-cap and smaller stocks are making gains, albeit lesser gains than their 'mighty' brethren. Opinion is turning with many big names stepping up to issue bearish pronouncements. However, there are no market facts to confirm their bearish prognostications evident at this time. By the time this run is over everyone, their bothers, dead great aunts and pets will be out there trying to hit a home run by nailing 'the top'. In the meanwhile there is investing to do and we should continue do so until the evidence suggest otherwise.
In the background the most likely bull slayer, interest rates, are strengthening. At some point investors will notice, but as of yet they do not seem to care. The five-year Treasury yield recorded a new high Friday at 2.48.
Steady as you go, with an eye on the horizon.
With the Value Line Geometric Average at 589.69, the Value Line Plan is in the market with a Friday sell stop of 576.33.
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, 4, IWF, 6, IWB, 1.
Country (21): EWO, 2, EWJ, 5, EWN, 8.
Sector (27): XLK, 6, IXG, 1, XLY, 2.
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.