Treasury Bond Yields Are Rising While Utility Stocks Rally

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

The 20+ Year Treasury bond ETF fell below its 200-day simple moving average of $121.69 on July 20 as investors worry about rate hikes by the FOMC.

The Utilities Select Sector SPDR ETF has been above its 200-day simple moving average of $51.66 since July 25 as investors seek dividends.

The SPDR Bloomberg Barclays High yield Bond ETF has been below its 200-day simple moving average since Jan. 9 with the average now at $36.21.

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 ($119.22 on Aug. 3) is down 6% year to date with a negative weekly chart with the ETF below the five-week modified moving average of $120.43. Sell strength to the 200-week simple moving average at $125.09.

Daily Chart For TLT Courtesy of MetaStock Xenith

The daily chart for the Treasury bond ETF shows the ticker below its 50-day and 200-day simple moving averages of $120.61 and $121.69, respectively. The horizontal line is my monthly value level at $117.48. 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 $117.48 and reduce holdings on strength to the 200-day simple moving average of $121.69.

The Utilities Select Sector SPDR Fund (NYSEARCA:XLU)

The Utility Stock ETF ($53.30 on Aug. 3) is up 1.2% year to date and has a positive but overbought weekly chart with the ETF above its five-week modified moving average of $52.04 and above its 200-week simple moving average of $48.58. Investors should continue to hold a core long position for its 3.30% dividend yield.

Daily Chart XLU Courtesy of MetaStock Xenith

The daily chart for the utility ETF shows the ticker above its 50-day and 200-day simple moving averages of $51.28 and $51.66, respectively, and well above my quarterly and monthly value levels of $49.98 and $46.38, 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 $46.39, 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 ($35.87 on Aug. 3) is down 2.3% year to date but with a positive weekly chart. The ETF is above its five-week modified moving average of $35.76 but below its 200-week simple moving average of $36.70. JNK has been below this ‘reversion to the mean’ since the week of Nov. 14, 2014 when the average of $40.08.

Daily Chart for JNK Courtesy of MetaStock Xenith

The daily chart for the junk bond ETF shows the ticker between its 50-day simple moving of $35.72 and well below its 200-day simple moving average at $36.21 last tested on Jan. 8 when the average was $37.03. The downside risk is to below the graph to my monthly and semiannual value levels of $35.13 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 $35.13 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.