Dec 26: Trading Bonds, Gold, Utilities, Commodities, Dollar Via ETFs

Richard Suttmeier

The Treasury Bond ETF (TLT) traded to its 2017 high of $129.56 on Sept. 7, and then declined to $122.42 on Oct. 25. The ETF slipped below its 50-day and 200-day simple moving averages last week but closed between them at $125.70 and $124.49, respectively.

The Gold Bullion ETF (GLD) set its 2017 high of $128.32 on Sept. 7, and then crashed to $117.40 on Dec. 12. GLD has rebounded to between its 50-day and 200-day simple moving averages at $121.05 and $120.57, respectively.

The Utility Stock ETF (XLU) set its all-time intraday high of $57.23 on Nov. 15, which was a test of my quarterly risky level of $57.22, where positions were reduced. XLU has since crashed to below its 50-day and 200-day simple moving averages of $55.23 and $53.53, respectively.

The Junk Bond ETF (JNK) set its 2017 high of $37.46 on July 26, and then traded as low as $36.28 on Nov. 15. The ETF has been below a ‘Death Cross’ since Dec. 7 with the 50-day and 200-day simple moving averages of $36.90 and $37.01, respectively.

The Commodities ETF (GSG) set a post-election low of $13.16 on June 21, and this heavily-weighted to energy futures ETF traded
as high as $16.07 on Nov. 6 on the positive effect of the “golden cross” that was confirmed on Oct. 20 when the stock closed at $15.01. This ETF is above its 50-day and 200-day simple moving averages of $15.55 and $14.66, respectively.

The Dollar ETF (UUP) traded to its post-election low of $23.66 on Sept. 8 and rebounded to as high as $24.75 on Oct. 27. The dollar is now below its 50-day and 200-day simple moving averages of $24.39 and $24.76, respectively.

The 20+ Year Treasury Bond ETF (TLT)

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The U.S. Treasury 30-Year Bond ETF trades like a stock using the 20+ Year Treasury Bond ETF, which a basket of U.S. Treasury bonds with maturities of 20+-Years to 30-Years. As a stock-type investment it never matures, and interest income is converted to periodic dividend payments.

The weekly chart for the Treasury Bond ETF has been downgraded to neutral with the ETF below its five-week modified moving average of $126.07. The ETF remains above its 200-week simple moving average of “reversion to the mean” of $123.85. The 12x3x3 weekly slow stochastic reading rose to 65.06 last week up from 62.95 on Dec. 15.

Based upon this analysis, buy weakness to my annual value level of $105.77, and reduce holdings on strength to my monthly risky
level of $128.93.

The Gold Bullion ETF (GLD)

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Investors can trade gold bullion like a stock using the SPDR Gold Shares ETF.

The weekly chart for the Gold Bullion ETF will begin 2018 positive if the ETF ends 2017 above its five-week modified moving average of $120.88. GLD held its 200-week simple moving average or “reversion to the mean” at $117.92 for two weeks in a row. The 12x3x3 weekly slow stochastic reading inched up to 24.75 last week up from 23.15 on Dec. 15.

Based upon this analysis, buy weakness to my weekly value level of $119.78, and reduce holdings on strength to my monthly
risky level of $123.60.

The Utilities ETF (XLU)

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Investors seeking the safety of dividends can trade the utilities ETF, which is a basket of 28 utility stocks.

The weekly chart for the Utilities Sector ETF turned negative a week ago as a big warning to reduce holdings on these dividend
stocks. The ETF is below its five-week modified moving average of $54.79. The 200-week simple moving average is the “reversion to the mean” at $47.22, The 12x3x3 weekly slow stochastic reading slumped to 62.55 last week down from 72.31 on Dec. 15, and down from 74.17 on Dec. 8.

Based upon this analysis, buy weakness to my annual value level of $50.72, and reduce holdings on strength to my weekly risky level of $56.20.

SPDR Bloomberg Barclay’s High Yield Bond ETF (JNK)

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Investors should avoid junk bonds as they correlate more to stocks than U.S. Treasuries. This is now a negative divergence for U.S. stocks.

The weekly chart for the junk bond ETF remains negative with the ETF below its five-week modified moving average of $36.82 and below its 200-week simple moving average or the “reversion to the mean” of $37.53 last tested during the week of Nov. 14, 2014 when the average was $40.08. The 12x3x3 weekly slow stochastic reading declined to 45.68 last week down from 49.04 on Dec. 15.

Based upon this analysis, reduce holdings on strength to my monthly pivot of $37.48.

iShares S&P GSCI Commodity-Indexed Trust ETF (GSG)

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The commodity ETF is heavily-weighted to energy by about 60%.

The weekly chart for the commodity ETF is neutral with the ETF above its five-week modified moving average of $15.59. The ETF is well below its 200-week simple moving average or the “reversion to the mean” of $19.26, last tested during the week of July 11, 2014 when the average was $33.40. The 12x3x3 weekly slow stochastic reading slipped to 78.10 last week down from 81.68 last week falling below the overbought threshold of 80.00.

Based upon this analysis, buy weakness to my monthly value level of $14.85, and reduce holdings on strength to my weekly
risky level of $16.24.

PowerShares DB US Dollar Index Bullish ETF (UUP)

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Investors interested in buying the dollar versus a basket of currencies trade this ETF. It includes below long the dollar vs. Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

The weekly chart for the bullish dollar ETF has been downgraded to negative with the ETF below its five-week modified moving average of $24.34 and below its 200-week simple moving average or the “reversion to the mean” of $24.46. The 12x3x3 weekly slow stochastic reading slipped to 56.76 last week down from 58.98 on Dec. 15.

Based upon this analysis, buy weakness to my monthly value level of $23.08, and reduce holdings on strength to my semiannual risky level of $27.01.

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