March 3, 2018
Welcome to the Bollinger Bands Letter Weekly Update for Saturday March 3rd, 2018.
It looks to me like the US stock market made an important short-term bottom Friday that should have intermediate-term implications. Coming into Friday the market was oversold. One way of seeing that is via the Open Arms Index in our Market Timing Chart Pack, which was over 1.2. So far this seems like a normal pullback within the context of an uptrend. Market internals were not hurt much despite the volatility and a new high could easily be confirmed. Clearly the pros are out gunning to destroy every product they can in the volatility sector and that is having some knock on effects in the market as a whole.
The market focus was on the new 'plain speaking' Fed chair, but in my reading he didn't actually add anything new to the puzzle, so I think that 'fear of Fed' will fade for a while.
Despite the correction and volatility in the market place, our FAANG index made a new closing high on Friday. Clearly, the leadership is still intact and the focus has stayed on large-cap growth.
Ice Breaker has managed to hold on to two positions for each of the monitored stocks despite the volatility.
Interestingly, even with all the volatility, the Value Line Plan has stayed in the market. With the Value Line Geometric Average at 550.70 the Friday buy stop is 547.33.
The bottom line is that our outlook remains positive, but cautious. If the technicals start to deteriorate we'll field some defense, but that hasn't happened yet.
As Sergeant Phil Esterhaus always said on Hill Street Blues: "Let's be careful out there!"
There were no changes to the ETF portfolios either last week or this week.
The ETF Program portfolio holdings:
Style (21): IUSG, 2, IWF, 3, IWB, 8.
Country (21): EWO, 7, EWJ, 9, EWM, 1.
Sector (27): XLK, 6, IXG, 10, XLY, 7.
Details on our Allocations, Ice Breaker positions and ETF portfolios along with our Market Timing Chart Package can be found here:
There are several changes to our Market Timing Chart Pack this week, some of which you can see and some of which are lurking in the background to prepare for the future. When I started this project I thought of it as just a little project to help me scan my market-timing charts, much like the timing charts I used to keep by hand so long ago. However, Mr. Murphy stepped in and now it is a full blown project itching to be an ever bigger project. I must have put in 10 hours last week just refactoring the code so it would be more flexible in the future. The S&P and Dow Jones chart sections now have Bollinger Bars, which provide a better overall view of the price structure than the line charts did. A bug in one of the volatility charts was addressed. 50-day Bollinger Bands were added to the chart depicting the percent of stock over their 50-day averages. The next additions will be a few interest-rate and yield-curve charts.
Until next time, I wish you well.
John Bollinger, CFA, CMT
Copyright 2018 by Bollinger Capital Management, Inc.