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The Capital Growth Letter
Bollinger Capital Management, May 2013
The Capital Growth Letter is a highly graphic monthly newsletter with an emphasis on technical analysis.
Covered are stocks, bonds, precious metals, commodities, the dollar and the international markets. It utilizes a technically driven asset allocation approach and provides equity analysis based on a proprietary industry group and sector analysis program.
What are Bollinger Bands?
Bollinger Bands are curves drawn in and around the price structure that provide relative definitions of high and low.
What are Bollinger Bands used for?
Knowing whether prices are high or low the investor/trader can make rational investment decisions by comparing price action to the action of indicators.
What can Bollinger Bands be applied to?
Most anything: stocks, indices, futures, currencies, mutual funds...
How are Bollinger bands calculated?
The base for the bands is a moving average and the band's width is determined by volatility.
Who created Bollinger Bands?
John Bollinger, CFA, CMT
The Capital Growth Letter will provide you with specific investment advice, improve your trading skills, and teach you how to analyze the market yourself
John Bollinger, CFA, CMT is best known for his Bollinger Bands and for his years as a commentator on CNBC. If you’ve seen his segments on CNBC and wished he had time to go into more details his Capital Growth Letter is for you!
John Bollinger has been publishing The Capital Growth Letter since 1988 and his loyal readers can tell you he does far more than comment on the market and provide profitable investment recommendations. Reading John’s monthly letter is a constant learning he experience. He doesn’t just tell you what to do. John teaches you how to analyze the market so you can make better investment decisions for yourself.
But the heart of the newsletter is John’s overview of the markets and his in detail analysis of stocks, bonds, precious metals, commodities, the dollar and the international markets.
Every month you get charts, analysis and commentary on the markets and timely investment recommendations. And the Monday weekly hotline keeps you up to date between issues.
Introduction from John Bollinger, CFA, CMT
Aren't the financial markets fascinating? Just when we think we know where they're headed, they surprise us. They seem to have a mind and a language all their own; a language I have made it my business to learn. When you consider my commentary over the years, I think you'll agree that I understand the market's messages.
I spent years studying the various tools available to analyze the financial markets. And then I made a few discoveries of my own - discoveries that have given me a very clear understanding of what the markets are telling us every day.
I'd like to share my discoveries with you - explain the language of the markets and interpret what they're saying.
The markets taught me the principles behind Bollinger Bands. I'd like to share with you what the markets have taught me lately.
While doing research in the options market in the early '80s I learned that volatility was key to understanding market action. Building on that knowledge I developed Bollinger Bands, which are driven by volatility. Bollinger Bands have proven to be so effective in predicting market behavior that they are now incorporated in most major investment software packages.
Bollinger Bands have helped me decipher important market messages. For instance: Say a stock is within a trading range and suddenly sells off, tagging my lower band. But the short-term volume and money-flow readings are very positive. Despite the sell-off, that's the market telling me to buy.
My work is based on listening and learning from the markets. And in the Capital Growth Letter I will share my insights with you.
Industry Group and Market Sector analysis can greatly increase your investment returns.
Careful study of the market reveals that stocks run in packs: Steels tend to move together, as do banks, casinos, utilities. In fact, most price movement is attributable to Market Sector and Industry Group action.
That's why one page of each issue of the Capital Growth Letter is dedicated to Industry Group and Market Sector analysis. In addition, Industry Group action is updated every Monday on the Hotline which is available online.
By investing in securities with rising Industry Group and Market Sector rankings - and avoiding or shorting securities with falling rankings - you can greatly increase your investment returns-especially in volatile markets like the one we are currently experiencing.
There's more to stock selection than fundamentals:
I started out as many investors do. I bought stocks on the basis of fundamental analysis. But after I bought, prices often declined - cheap stocks just got cheaper.
That's when I realized there's more to stock selection than fundamentals. You have to look at the technicals, too. Today when I find a stock whose fundamentals I like, I use technical analysis to determine if and when to buy. Sometimes the technicals are never right, and I don't buy.
I call this combination of fundamental and technical analysis Rational Analysis . . .
Rational Analysis has other benefits as well. I carefully screen the markets each day looking for significant technical action. This often leads to fundamental insights well in advance of the actual events.
In the Capital Growth Letter I'll show you the mechanics of Rational Analysis, using both fundamental and technical approaches, to give you an extremely reliable indication of the direction the markets are headed. I'll also show you how to use technical analysis to determine whether to buy or sell once you have made fundamental stock selections.
I believe your investments should grow in bad times, as well as good.
There's more to investing than being able to read the markets and select successful stocks and bonds.
Academic studies have shown that asset allocation is the key to superior investment performance. I agree. That's why a prominent feature on the cover of every Capital Growth Letter is my asset allocation chart.
But I want your investments to grow in bad times, as well as good. I want to help you preserve your precious capital. And Asset allocation is only one way to do that. When the markets are falling short sales and put options are important too.
That's why we are willing to take short positions. In bad times we recommend ways of making money despite falling prices.
Today's markets are global and resonate to world events.
Markets don't exist in a vacuum. But often investors make decisions as if they do. That's why the Capital Growth Letter looks at the bigger picture - putting investment decisions in the global context. World events, after all, have a way of making the markets behave in unexpected ways.
For instance, how will the peace process in the Middle East affect your investments? Or worldwide terrorism? And what about economic decisions made in Washington D.C.?
I evaluate all these factors in the Capital Growth Letter. I lay out in detail what I think the markets are saying and explain my interpretations. Then I offer specific investment recommendations.
Every month, I'll share with you my comprehensive analysis of the current markets.
Many investors are profiting richly from the guidance in the Capital Growth Letter. I want you to share the tools and information that are helping this group of investors be successful.
Every month, I'll give you my readings on the following markets:
- Stocks - domestic and international
- Precious Metals
- Energy - especially the oil market
- Currencies - especially the dollar
Each month the Stock Section reviews the equity market, including anticipated changes. Every issue features a wide variety of charts, including the S&P 500 with Bollinger Bands. I analyze and report on what I view as the important market factors and offer new buy and sell recommendations.
In the Bond Section, I'll give you a similar overview and forecast. I'll also include a chart of interest rates with Bollinger Bands.
In other words, I'll not only share with you how the markets communicate, but I'll explain what they are saying right now.
I understand that the 30 days between issues can feel like an eternity - especially when the markets are volatile.
A valuable benefit of being a Capital Growth Letter subscriber is free access to the Hotline, which is updated every Monday, so important up-to-date information is just a moment away.
And for when the market is especially volatile there is a special Hotline posted. When the Dow moves more than 200 points, when bonds move a full point, or when extraordinary market conditions dictate a Hotline is there with my latest commentary.
The Capital Growth Letter will provide you with specific investment advice, improve your trading skills, and teach you how to analyze the market yourself.
I think you'll enjoy a better understanding of the markets. You'll certainly enjoy more successful investing.
You have been an excellent teacher. Without your help my knowledge of the market would be half of that it is today.
John has provided me with something hard to find these days - a rational view of the market.
I am an old stock market junky and I believe your analysis and approach to the market is the best I have seen.
St. Louis, MO
John Bollinger’s Capital Growth Letter will provide you with specific investment advice, improve your trading skills, and teach you how to analyze the market yourself. Sign up today.
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