Gold Remains Overbought, Commodities Including Oil Remain Oversold As The Dollar Slumps

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

The Gold Shares ETF remains in a trend above its “reversion to the mean” at $117.64 with overbought weekly stochastics.

The commodities ETF remains in bear market territory 23.2% below its 2018 high of $18.81 set on Oct. 3 as the weekly chart for crude oil remains negative.

The long dollar ETF shows downside risk to the 200-day SMA at $25.01 as the weekly chart is negative.

Here are the daily charts for the gold, 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)

Daily Chart For GLD Courtesy of MetaStock Xenith

The Gold ETF ($121.44 on Jan. 4) is up 0.2% year to date and is 6.2% below its 2018 high of $129.51 set on Jan. 25. The weekly chart is positive but overbought with the ETF above its five-week modified moving average at $118.33 and trending above its 200-week simple moving average or “reversion to the mean” at $117.64. The 12x3x3 weekly slow stochastic reading rose to 85.23 last week, up from 81.92 on Dec. 28 rising further above the overbought threshold of 80.00.

The daily chart shows strength above the 200-day SMA since Dec. 20 with the 50-day and 200-day simple moving averages converging at $117.07 and $118.62, respectively, and a “golden cross” remains likely to be set in January.

Investor Strategy: Buy weakness to my semiannual value level at $120.36 and reduce holdings on strength to my quarterly risky level at $130.76.

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

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

Daily Chart For GSG Courtesy of MetaStock Xenith

The Commodities ETF ($14.45 on Jan. 4) is up 3.1% year to date with the ETF still in bear market territory, down 23.2% from its Oct. 3 high of $18.81. The weekly chart for GSG remains negative but oversold with the ETF below its five-week MMA of $15.10 and below its 200-week SMA or “reversion to the mean” at $16.03. The 12x3x3 weekly slow stochastic reading ended last week at 9.41 last week still well below the oversold threshold of 20.00. The reading below 10.00 makes commodities “too cheap to ignore”.

Nymex crude oil closed last week at $48.27 still in bear market territory 37.2% below 2018 high of $76.90 set on Oct. 3. Oil is below its 200-week SMA or “reversion to the mean” at $52.18.

The daily chart shows that GSG formed a “death cross” on Nov. 29. A “death cross” occurs when the 50-day SMA falls below its 200-day SMA indicating that lower prices would follow. The 50-day and 200-day SMAs are now $15.57 and $16.94.

Investor Strategy: Buy GSG weakness to my weekly value level of $13.24 and reduce holdings on strength to my monthly and quarterly risky levels at $15.59 and $15.60, respectively.

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.

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

Daily Chart For UUP Courtesy of MetaStock Xenith

The Dollar ETF ($25.46 on Jan. 4) set its 2018 high of $26.12 on Dec. 14. The weekly chart is negative with the ETF below its five-week MMA of $25.68 but above its 200-week SMA or “reversion to the mean” of $25.02. The ETF has been rising with its 200-week SMA since the week of July 28, 2017. The 12x3x3 weekly slow stochastic reading declined to 68.08 last week, down from 78.86 on Dec. 28.

The daily chart shows that UUP remains below its 50-day SMA at $25.78 with its 200-day SMA now at $25.01. My quarterly value level is $23.33 with my annual pivot at $25.47 and semiannual and monthly risky levels at $26.39 and $26.49, respectively.

Investor Strategy: Buy weakness to my quarterly value level at $23.23 and reduce holdings on strength to my semiannual and monthly risky levels at $26.39 and $26.49, respectively. My annual pivot is $25.47.

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.