June 2, 2018
Welcome to the Bollinger Bands Letter Weekly Update for Saturday June 1, 2018.
A basic principle of a strong stock market is the ability to overcome bad news, focus on good news, and make price progress. Our FAANG stock index made new highs this week against a background of market turmoil created by the failure of Italy to form a government. This was a perfect example of one of our favorite analytical tools, market reaction to news. Over Memorial Day, two Italian parties came to loggerheads over the selection of a finance minister who was a euro-skeptic. Tuesday morning saw a sharp drop in world stock averages that broke the bottom edge of the trading range as fears of a euro-crisis surfaced. This turned into a classic Wyckoff Spring formation on Wednesday as stocks snapped right back into the trading range. That Spring immediately led to new highs creating a small textbook example of the formation and its resolution. This was the second example of a failed bear raid in rapid succession—see last week’s update. I was hoping for a bit more of a pullback to generate a classic reentry buy signal, but this market is just too strong for that sort of thing.
Our outlook for stocks remains positive as the market has demonstrated enough strength to overcome bad news and make upside progress. Participation is broad, with the advance decline lines that we track all making new highs. Internal indicators are also healthy with smaller stocks and growth being the main focus. Maintain all positions and add to IJT if needed.
There are no changes to the ETF portfolios this week.
There are no changes to the portfolios this week, maintain all positions including our speculative trades if you made them.
I’ll be working from the road for another week and our physical office will be closed. Even so, it is business as usual. If you need anything just email or call. (There may be some time zone delays.)
The Value Line Program is in the market. With the Value Line Geometric at 567.98, the Friday sell stop is 554.87.
The ETF Program portfolio holdings:
Style (21): IJT, 1, IWF, 7, IWO, 4.
Country (21): EWS, 10, EWU, 2, EWH, 1.
Sector (27): XLK, 3, PSJ, 1, XLY, 8.
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.