Jan. 29: Trading Bonds, Gold, Utilities, Commodities, Dollar Via ETFs

Richard Suttmeier

The 20+ Year Treasury Bond ETF (TLT)

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 Treasury Bond ETF traded to its 52-week high of $129.56 on Sept. 7, then declined to $122.42 on Oct. 25. The ETF is below
its 50-day and 200-day simple moving averages of $125.88 and $125.00, respectively.

Courtesy of MetaStock Xenith

The weekly chart remains negative with the ETF below its five-week modified moving average of $124.92. The ETF is now below its 200-week simple moving average of “reversion to the mean” of $124.27. The 12x3x3 weekly slow stochastic reading slipped to 39.80 last week down 49.99 on Jan. 19.

Based upon this analysis, reduce holdings on strength to my weekly, monthly and quarterly risky levels of $124.22, $128.67 and $135.08, respectively.

The Gold Bullion ETF (GLD)

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

The Gold Bullion ETF set its 52-week high of $129.51 on Jan. 25 up from $117.40 on Dec. 12. GLD is well above its 50-day and
200-day simple moving averages at $122.20 and $121.37, respectively. A short-term warning is that Jan. 25 was a ‘key reversal’ as the close that day was below the low of Jan. 24.

Courtesy of MetaStock Xenith

The weekly chart for the Gold Bullion ETF is positive but overbought with the ETF above its five-week modified moving average of $124.66. GLD is above its 200-week simple moving average, or “reversion to the mean” at $117.82 which held at the December low. The 12x3x3 weekly slow stochastic reading rose to 81.02 last week moving above the overbought threshold of 80.00.

Based upon this analysis, buy weakness to my weekly, monthly and semiannual value levels of $124.12, $122.75 and $118.74,
respectively, and reduce holdings on strength to my quarterly and annual risky levels of $139.65 and $146.20, respectively.

The Utilities ETF (XLU)

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

The Utility Stock ETF set its all-time intraday high of $57.23 on Nov. 15, which was a test of my quarterly risky level of $57.22 at that time and where investors reduced holdings. XLU is well below its 50-day and 200-day simple moving averages of $53.53 and $53.49 respectively, as a ‘death cross’ will form today.

Courtesy of MetaStock Xenith

The weekly chart for the Utilities Sector ETF is negative but oversold with the ETF below its five-week modified moving average of $52.16. The 200-week simple moving average is the “reversion to the mean” at $47.48. The 12x3x3 weekly slow stochastic reading declined to 14.09 declining further below the oversold threshold of 20.00.

Investment Strategy: Buy weakness to my weekly value level of $49.45, and reduce holdings on strength to my annual, monthly, semiannual and quarterly risky levels of $54.46, $55.88, $58.60 and $59.24, respectively.

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

Investors should avoid junk bonds as they correlate more to stocks than U.S. Treasuries, hence the recent strength.

The Junk Bond ETF set its 52-week high of $37.46 on July 26, then traded as low as $36.28 on Nov. 15. The ETF is between
its 50-day and 200-day simple moving averages of $36.80 and $37.03, respectively.

Courtesy of MetaStock Xenith

The weekly chart for the junk bond ETF is positive with the ETF above its five-week modified moving average of $36.86 and below its 200-week simple moving average or the “reversion to the mean” of $37.42 last tested during the week of Nov. 14, 2014 when the average was $40.08. The 12x3x3 weekly slow stochastic reading rose to 56.12 last week up from 52.10 on Jan. 19.

Based upon this analysis, buy weakness to my semiannual value level of $33.99, and reduce holdings on strength to my
annual and quarterly risky levels of $37.15 and $38.98, respectively.

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

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

The Commodities ETF set its 52-week low of $13.16 on June 21, and this heavily-weighted to energy futures ETF traded as high as $17.22 on Jan. 25, following the positive effect of the “golden cross” that was confirmed on Oct. 20 when the stock closed at $15.01. This ETF is well above its 50-day and 200-day simple moving averages of $16.08 and $14.87, respectively.

Courtesy of MetaStock Xenith

The weekly chart for the commodity ETF is positive but overbought with the ETF above its five-week modified moving average of $16.38. The ETF is still below its 200-week simple moving average or the “reversion to the mean” of $18.85, last tested during the week of July 11, 2014 when the average was $33.40. The 12x3x3 weekly slow stochastic reading rose to 91.69 last week up from 89.18 on Jan. 19 rising further above the overbought threshold of 80.00.

Based upon this analysis, buy weakness to my annual, quarterly and monthly value levels of $16.20, $16.01 and $15.79,
respectively, and reduce holdings on strength to my annual risky level of $22.87.

PowerShares DB US Dollar Index Bullish ETF (UUP)

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 Dollar ETF has been trading lower since testing $24.75 on Oct. 27. The dollar set its 52-week low of $23.08 on Jan. 25,
which was a test of my monthly value level. The dollar is below its 50-day and 200-day simple moving averages of $24.10 and $24.53.

Courtesy of MetaStock Xenith

The weekly chart for the bullish dollar ETF remains negative with the ETF below its five-week modified moving average of $23.87 and is below its 200-week simple moving average or the “reversion to the mean” of $24.52. The 12x3x3 weekly slow stochastic reading fell to 15.09 last week down from 19.02 on Jan. 19, falling further below the oversold threshold of 20.00.

Based upon this analysis, buy weakness to my annual value level of $22.35, and reduce holdings on strength to my semiannual risky level of $27.37. Monthly, quarterly and annual pivots are $23.08, $24.01 and $24.18, respectively.

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