Use Daily Charts To Trade Volatility In Bond And Utility ETFs

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Includes: JNK, TLT, XLU
by: Richard Suttmeier
Summary

The 20+ year Treasury bond ETF has been trading back and forth around its 200-day simple moving average of $122.00.

The Utilities Select Sector SPDR ETF stayed above its 200-day simple moving average of $51.73 since July 10.

The SPDR Bloomberg Barclays High Yield Bond ETF continues to lag below my annual risky level of $37.15.

Here are the daily charts and key levels for bonds and utilities exchange-traded funds.

The 20+ Year Treasury Bond ETF (NYSEARCA:TLT)

The U.S. Treasury 30-Year Bond ETF trades like a stock and is 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 ($121.98 on July 17) is down 3.8% year to date but has a positive but overbought weekly chart with the five-week modified moving average of $121.25. Sell strength to the 200-week simple moving average at $125.07.

Daily Chart For TLT

Courtesy of MetaStock Xenith

The daily chart for the treasury bond ETF shows the ticker below its 200-day simple moving average of $122.00. The lower horizontal line is my monthly value level at $119.79. My weekly risky level is $125.07. My quarterly value level is below the chart at $109.86. My semiannual and annual risky levels are above the chart at $134.79 and $145.17, respectively.

Investor Strategy: Buy weakness to my monthly value level of $119.79 and reduce holdings on strength to the 200-week simple moving average of $125.07.

The Utilities Select Sector SPDR Fund (NYSEARCA:XLU)

The Utility Stock ETF ($52.45 on July 17) is down just 0.4% year to date and still has a positive weekly chart with the ETF above its five-week modified moving average of $51.45 and above its 200-week simple moving average of $48.47. Investors should continue to consider a core long position in XLU for its 3.36% dividend yield.

Daily Chart For XLU

Courtesy of MetaStock Xenith

The daily chart for the utility ETF shows this ticker above its 200-day simple moving average of $51.73 and well above its quarterly and monthly value levels of $49.98 and $48.52, respectively. The upside is to my semiannual and annual risky levels of $53.86 and $54.46, respectively.

Investor Strategy: Investors should buy weakness to my quarterly and monthly value levels of $49.98 and $48.52, respectively, and reduce holdings on strength to my semiannual and annual risky levels of $53.86 and $54.46, respectively.

SPDR Bloomberg Barclays High Yield Bond ETF (NYSEARCA:JNK)

The Junk Bond ETF ($35.69 on July 17) is down 2.8% year to date with a neutral weekly chart. The ETF is on the cusp of its five-week modified moving average of $35.70. The ticker has been below its 200-week simple moving average since the week of Nov. 14, 2014, when the average of $40.08 which is now at $36.75. Keep in mind that JNK tends to track stocks not bonds.

Daily Chart For JNK

Courtesy of MetaStock Xenith

The daily chart for the junk bond ETF shows the ticker on the cusp of its 50-day simple moving of $35.70 and well below its 200-day simple moving average at $36.29. The downside risk is to below the graph to my monthly and semiannual value levels of $34.95 and $31.15, respectively. My annual and quarterly risky levels are at the horizontal lines at the top of the graph at $37.15 and $37.23, respectively.

Investor Strategy: Buy weakness to my monthly and semiannual value levels of $34.95 and $31.15, respectively, and reduce holdings on strength to my annual and quarterly risky levels of $37.15 and $37.23, respectively.

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.