February 11, 2018
Welcome to the Bollinger Bands Letter Weekly Update for Sunday February 11th, 2018.
US stock-market trends still favor larger stocks and growth; clearly even in a correction this market has a one-track mind. Our FAANG Index covered its breakaway gap with Friday's wild swings, which might suggest that it has fallen far enough. (Still needs confirmation.) Along the same lines, Friday's sharp intraday reversal established a short-term W bottom. (A good up day Monday (or Tuesday) would confirm.) The market is quite oversold on a short-term basis so the odds of a bounce look quite good. The name of the game is to examine the ensuing rally. If it is strong and well confirmed then all clear, but if it is weak and full of divergence then we must expect more downside.
I am aware that the Value Line Plan report on the BollingerBands.com website is incomplete. I am working on a revision to the plan and will update that portion of the website when it is ready. The numbers in the Weekly Updates are correct.
Ice Breaker took additional positions on Thursday February 8th. Each of the five monitored ETFs now has two positions.
With the Value Line Geometric Average at 537.77 the Value Line Plan remains out of the market with a Friday buy stop of 545.89.
Next week is a newsletter week, the February Bollinger Bands Letter will be posted on the 17th. We have entered a new era that most of today's market participants are ill-equipped to deal with; an era when good news is bad and bad news is good. That will be a major theme of this month's letter.
There were no changes to the ETF portfolios this week though we had some rather large changes in rank in the International portfolio as the correction rattled the international markets.
I have added a new chart to our Market Timing Chart pack this week. It is an indicator derived from the ratio of the VIX, a 30-day forecast of volatility, to a 3 month version of the same series. Basically it is a sentiment indicator, a greed and fear indicator. Sentiment is bullish at high values and bearish at low values. Troughs are generally pretty good buying zones. More on this in the letter. This service now presents 19 market-timing charts. Please let us know if you have any suggestions for additional charts.
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, 3, IWF, 1, IWB, 5.
Country (21): EWO, 2, EWJ, 5, EWN, 8.
Sector (27): XLK, 9, 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.