April 7, 2018
Welcome to the Bollinger Bands Letter Weekly Update for Saturday April 7th, 2018.
Support at its breakout levels failed for our FAANG index and it is now trading in the vicinity of its January highs. While the large-cap crowd gets whipped around by the news, smart money is accumulating smaller stocks and it is looking like small-cap growth is the emerging meme. Despite all the volatility and the madness in the news our outlook for stocks remains constructive. Looking through our market-timing chart pack we just do not see significant technical deterioration of the sort we'd expect to see if this were an important market top or a bear market were underway. Last week’s buys were triggered and we stand by them. It may be tough going for stocks for a while, but until we see real signs of deterioration we'll stick to the plan.
I have reworked chart 15 in our market timing chart pack. It now features single-day TRading INdex (TRIN) readings and the 10-day Open Arms Index. I have rebased both indicators from one to zero and inverted the scale so that peaks in the indicators coincide with peaks in price. To facilitate comparability TRIN values are plotted as logs so they scale correctly with the Open Arms Index. To help identify short-term strength and weakness I have included reference lines at +0.30 and – 0.30, which are equal to TRIN readings of 2.0 (oversold) and 0.5 (overbought). I believe that the result is a much more useful presentation of these classic market timing tools. Enjoy! (Traditionalists can complain to BBands@BollingerBands.com.)
There is one change to the ETF portfolios this week, sell EZA and buy EWI, which is a switch from South Africa to Italy. Note that the large-cap ETFs are rotating down in their relative strength rankings; we expect that they will be switched out for small-cap growth before too long.
The Value Line remained in the market this week, with the Value Line Geometric at 542.22, and the Friday sell stop is 533.81
The ETF Program portfolio holdings:
Style (21): IUSG, 10, IWF, 8, IWO, 3.
Country (21): EWO, 3, EWI, 2, EWM, 1.
Sector (27): XLK, 7, IAU, 1, XLY, 6.
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.