January 5, 2019
Welcome to the Bollinger Bands Letter Update for Saturday the 5th of January 2019.
My work suggests, and I believe, that we have seen an intermediate term bottom in the stock market that will lead to a substantial rally. There have been any number of technical buy signals including the Colby signal based on the Investors Intelligence survey. I'll take them up in detail in the January letter, but you can see some of them in the chart pack.
That relatively bullish opinion does not preclude the idea of a retest of the lows, which I consider to be highly likely. I would like to raise our allocation for stocks to first sixty and then seventy percent, but I believe we should wait for a pullback and retest and see what the developing (new) leadership will look like.
I think that the story around Apple is really interesting, going from beloved to hated in such a short time. Yes, Apple does have problems, but this is still one of the best companies on the planet and it is already cheap to boot. The psychology behind the decline is textbook crowd behavior. I have no doubt that Apple is setting up an important buying opportunity, but I think that patience is required as it seems highly unlikely that the hating and pain are over yet. To witness that, Bloomberg put out an Apple bashing piece on Friday and I have no doubt that there will be many more. Apple already yields two percent, which is unheard of for a quality growth stock.
The rest of the FAANG stocks are doing better and our FAANG index has recovered nicely, even with the damage created by Apple.
Last week’s bounce suggestions have done well. However, I plan to hold off on more ideas until we see how the retest goes.
The Value Line Program is in the market. With the Value Line Geometric Average at 483.46, the Friday sell stop stands at 471.37.
There are no changes to the ETF portfolios this week.
The ETF Program portfolio holdings:
Style (21): IVV 4, IWD 7, IVE 8
International (21): RSX 3, EWL 9, EWZ 1
Sector (27): XLV 4, XLU 2, XLP 11
Our allocations are 50% US stocks, 10% international, 10% yield and 30% cash.
Details on our Allocations, Ice Breaker positions and ETF portfolios along with your weekly Market Timing Chart Pack can always be found here:
Until next time, I wish you well.
John Bollinger, CFA, CMT
Copyright 2019 by Bollinger Capital Management, Inc.