The Gold ETF Holds 'Reversion To The Mean', Commodities Poised To Pop, Dollar Now Overbought

|
Includes: GLD, GSG, UUP
by: Richard Suttmeier
Summary

The Gold Shares ETF sets new 2018 low of $117.40 on July 2.

Nymex crude oil held my annual value level of $63.81 on June 18 and set a new 2018 high of $75.27 on July 3.

The commodities ETF is above its technical "reversion to the mean" and my annual pivot at $16.20.

The long dollar ETF is above its technical "reversion to the mean" and my annual pivot of $24.18.

Here are the weekly charts and the key levels for the remainder of 2018 for commodities and dollar exchange-traded funds.

The gold trust ETF tracks the spot price of gold and are said to be backed by gold bars in vaults in London.

SPDR Gold Trust (NYSEARCA:GLD)

The Gold ETF ($118.65 on July 3) is down 4% year to date and is below a "death cross" that formed on June 21. The 50-day simple moving average at $122.56 is below the 200-day simple moving average of $123.61 as the ETF traded as low as $117.40 on July 2.

Weekly Chart For GLD

Courtesy of MetaStock Xenith

The weekly chart for the gold ETF is negative but oversold with the ETF below its five-week modified average of $121.32 but weakness has held its 200-week simple moving average or "reversion to the mean" at $117.76. The 12x3x3 weekly slow stochastic reading is projected to decline to 9.43 this week, down from 10.45 on June 29 well below the oversold threshold of 20.00. Below 10.00 indicates that gold has become "too cheap to ignore".

Investor Strategy: Buy weakness to the 200-week simple moving average of $117.76 then to my quarterly and semiannual value levels of $113.60 and $103.62, respectively, and reduce holdings on strength to my monthly risky level of $125.59.

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

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

The Commodities ETF ($17.66 on July 3) is up 8.5% year to date and is above its 50-day simple moving average of $17.58 and well above its 200-day simple moving average of $16.41.

Weekly Chart For GSG

Courtesy of MetaStock Xenith

The weekly chart for the commodity ETF is neutral with the ticker above its five-week modified moving average of $17.52 and above its 200-week simple moving average of $17.04. The ETF is also above my annual pivot of $16.20. The 12x3x3 weekly slow stochastic reading ended June at 64.85, down from 66.80 on June 22.

The weekly chart for Nymex crude oil is positive. After holding my annual value level of $63.81 on June 18 oil is above my third quarter pivot of $68.14 with my risky level for June at $77.07.

Investor Strategy: Buy GSG on weakness to my quarterly and annual pivots of $16.35 and $16.20, respectively, and reduce holdings on strength my monthly risky level of $18.45.

PowerShares DB US Dollar Index Bullish ETF (NYSEARCA:UUP)

The US Dollar ETF is a basket of currencies that includes the dollar vs. euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.

The Dollar ETF ($24.98 on July 3) is up 4% year to date and has been above a "golden cross" since May 30. The 50-day and 200-day simple moving averages are now up to $24.64 and $24.11, respectively. The dollar ETF set a new 2018 high of $25.17 on June 28.

Weekly Chart For UUP

Courtesy of MetaStock Xenith

The weekly chart for the bullish dollar ETF is positive but overbought with the ticker above its five-week modified moving average of $24.72 and above its 200-week simple moving average or "reversion to the mean" at $24.81. The 12x3x3 weekly slow stochastic reading rose to 89.71 at the end of June from 88.97 on June 22 and well above the overbought threshold of 80.00.

Investor Strategy: Buy weakness to my quarterly, annual and monthly value levels of $24.84, $24.18 and $23.76, respectively, and reduce holdings on strength to my semiannual risky level of $28.65.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.