Weekly Update

March 24, 2018

Welcome to the Bollinger Bands Letter Weekly Update for Saturday March 24th, 2018.

For the first time in a while smaller stocks are gaining some advantage. Growth is still leading, except for large stocks where it has weakened a bit. I am always wary of changes in leadership in declines, so we will wait and see on this. I do expect leadership changes through this correction and am watching for them carefully.

Speaking of leadership, there has been a lot of news for the FAANG stocks, starting with Facebook's bad behavior through a potential trade war. Yet, all that has happened to price is a pullback to the prior breakout point. If we can hold here, this will be an excellent reentry buy signal.

The first leg down in this correction was caused by fear of interest rates rising, This leg down the blame is on a potential trade war. What is most striking is the downside acceleration. One way of getting a handle on this is to count the action. For the NASDAQ 100 ETF, which is where all the action has been, the first leg down ran nine bars and 12%, the second leg down has run eight bars and 9.4% so far.

I believe that this is a correction in an ongoing bull run and I think that we are working on an intermediate-term "W" bottom. I am simply not seeing the sorts of internal dynamics that one would expect to see if we were transitioning to a bear market. That means that I am looking for opportunities being created by fear, uncertainty and doubt, and not looking to dump stocks.

The Value Line Plan exited the market on Friday. With the Value Line Geometric Average at 537.92, the Friday buy stop stands at 546.04

There are two changes to the ETF portfolios this week, sell IWB and buy IWO, sell IXG and buy IAU. The first is a switch from large-cap blend to small-cap growth. The second switch is from global financials to gold stocks.

As we should expect in a period of downside acceleration, there have been some changes to Ice Breaker. Details on the web site.

The ETF Program portfolio holdings:

Style (21): IUSG, 8, IWF, 7, IWO, 1.

Country (21): EWO, 2, EZA, 5, EWM, 1.

Sector (27): XLK, 9, IAU, 1, XLY, 7.

Details on our Allocations, Ice Breaker positions and ETF portfolios along with our Market Timing Chart Package can be found here:

https://www.bollingerbands.com/bb-letter/

Until next time, I wish you well.

John Bollinger, CFA, CMT