How To Trade ETFs For Bonds, Gold, Commodities And The Dollar

“Flight to safety” investors concentrate on the exchange-traded funds associated with U.S. Treasury bonds, gold bullion and utility stocks, but you can also trade commodities and the dollar.

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Yields are lower, gold sets another post-election high and utilities are providing dividend income as Hurricane Irma barrels towards Florida. Commodities are on the rise as the dollar slumps to a new 2017 low.

No new highs this week for the Dow Jones Industrial Average and S&P 500, as investors demand grows for “flight to safety” investments, treasury bonds, and gold bullion and utilities stocks. The dollar is weak as commodities weighted to energy rise.

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 ($129.28 on Sept. 7) is positive with the ETF above its five-week modified moving average of $126.54 and above its 200-week simple moving average of $122.30 or the “reversion to the mean”, which had been a magnet between the week of Nov. 25 and the week of May 12, when the average was $120.63. The 12x3x3 weekly slow stochastic reading is projected to rise to 70.77 this week up from 65.39 on Sept. 1.

Investment Strategy: Buy weakness to my semiannual value level of $125.69. My monthly pivot is $128.52. Sell strength to my annual and quarterly risky levels of $132.13 and $136.15, respectively.

The Gold Bullion ETF (GLD)

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

The weekly chart for the Gold Bullion ETF ($128.13 on Sept. 7 is positive but overbought with the ETF above its five-week modified moving average of $123.09 and above its 200-week simple moving average of $117.84, which is the “reversion to the mean”, tested several times since the week of Feb. 24. The 12x3x3 weekly slow stochastic reading is projected to rise to 84.50 this week up from 78.66 on Sept. 1 rising above the overbought threshold of 80.00.

Trading Strategies: Buy weakness to my quarterly value level of $119.28. Sell strength to my monthly risky level of $131.57 and my annual risky levels of $159.17 and $160.24.

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 ETF ($55.10 on Sept. 7) is positive but overbought with the ETF above its five-week modified moving average of $54.16. The ETF is above its 200-week simple moving average or the “reversion to the mean” of $46.01. The 12x3x3 weekly slow stochastic reading is projected to rise to 82.73 this week up from 78.57 on Sept. 1 moving above the overbought threshold of 80.00.

Investment Strategy: Buy weakness to my semiannual and annual value levels of $51.98 and $50.72, respectively. Sell strength to my monthly and quarterly risky levels of $56.52 and $56.64, respectively.

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.

The weekly chart for the junk bond ETF ($37.04 on Sept. 7) is neutral with the ETF just below its five-week modified moving average of $37.07. The ETF is below its 200-week simple moving average or the “reversion to the mean” of $37.81, last tested during the week of Nov. 14 when the average was $40.08. The 12x3x3 weekly slow stochastic reading is projected to inch higher to 47.61 this week up from 44.92 on Sept. 1.

Investment Strategy: Buy weakness to my semiannual and quarterly value levels of $34.68 and $33.57, respectively. Sell strength to my monthly and annual risky levels of $37.93 and $43.98, respectively.

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

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The weekly chart for the commodity ETF ($14.70 on Sept. 7) is positive with the ETF above its five-week modified moving average of $14.35. The ETF is well below its 200-week simple moving average or the “reversion to the mean” of $20.49, last tested during the week of July 11, 2014 when the average was $33.40. The 12x3x3 weekly slow stochastic reading is projected to rise to 75.95 this week up from 70.76 on Sept. 1.

Investment Strategy: Buy weakness to my monthly value level of $13.65. My weekly pivot is $14.89. Sell strength to my annual risky level of $22.73.

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 ($23.76 on Sept. 7) is negative but oversold with the ETF below its five-week modified moving average of $24.20. The ETF is below its 200-week simple moving average or the “reversion to the mean” of $24.26, last tested during the week of Aug. 18 when the average was $24.23. The 12x3x3 weekly slow stochastic reading is projected to end the week at 9.37 well below the oversold threshold of 20.00.

Investment Strategy: Buy weakness to my annual value level of $22.89. My monthly pivot is $23.61. Sell strength to my quarterly and semiannual risky levels of $25.35 and $25.86, respectively.

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