The Treasury Bond And Utilities ETFs Remain In Range While The Junk Bond ETF Tests Risky Level

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

The Treasury Bond ETF traded back and forth around my semiannual pivot at $121.37 last week.

The Utilities Sector ETF is trading between my semiannual pivot at $52.38 and my quarterly risky level at $55.87.

The High Yield Bond ETF tested and then faded from its quarterly risky level at $35.27 and 200-day SMA at $35.38.

The yield on the 30-Year Treasury Bond is in a trading range between its 200-day simple moving average at 3.132% and its Jan. 4 low of 2.888%. On Jan. 30, the Federal Reserve balance sheet was marked at $4.040 trillion, down $7 billion from a week ago. The total for January is now $18 billion.

The utilities stock ETF offers a dividend yield of 3.37%, a reason to maintain a "flight to safety" core holding. The buy level is the "reversion to the mean" at $49.64.

The junk bond ETF bottomed with stocks on Dec. 26, but the upside should be limited to its "reversion to the mean" at $36.16. This ETF has been below its 200-week simple moving average since the week of Nov. 14, 2014.

Here are the daily charts for these ETFs

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.

Daily Chart for TLT

Courtesy of MetaStock Xenith

The Treasury Bond ETF ($120.96 on Feb. 1) is above a "golden cross" that formed on Jan. 29 when the 50-day SMA rose above the 200-day SMA with these averages now at $119.30 and $118.60. The ETF is trading between its monthly value level for February at $117.46 and its semiannual pivot at $121.37 after strength above this level failed to hold.

TLT has a neutral weekly chart with the ETF above its five-week modified moving average of $119.81. The ETF remains below its 200-week simple moving average or "reversion to the mean" at $124.01. The 12x3x3 weekly slow stochastic reading ended last week slipping to 73.12, down from 75.06 on Jan. 25.

Investor Strategy: Buy weakness to my monthly value level at $117.46 and reduce holdings on strength to the 200-week SMA at $124.01.

The Utilities Select Sector SPDR Fund (NYSEARCA:XLU)

Daily Chart for XLU Courtesy of MetaStock Xenith

The Utility Stock ETF ($54.55 on Feb. 1) is above its 50-day and 200-day SMAs at $54.10 and $52.78, respectively. My semiannual pivot is $52.38 with my quarterly and monthly risky levels at $55.87 and $56.25, respectively.

XLU has a positive weekly chart with the ETF above its five-week modified moving average at $53.87 and above its 200-week simple moving average or "reversion to the mean" at $49.64. The 12x3x3 weekly slow stochastic reading rose slightly to 43.58 last week, up from 42.75 on Jan. 25.

Investor Strategy: Investors should buy weakness to my semiannual pivot at $52.38 and to the 200-week SMA at $49.64 and reduce holdings on strength to my quarterly and monthly risky levels at $55.87 and $56.25, respectively.

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

Daily Chart for JNK Courtesy of MetaStock Xenith

The Junk Bond ETF ($35.17 on Feb. 1) is above my monthly and annual pivots at $34.39 and $34.20, respectively, and below my quarterly risky level and 200-day simple moving average at $35.27 and $35.38, respectively, after both levels were tested last week as an opportunity to reduce holdings.

JNK has a positive weekly chart with the ETF above its five-week modified moving average at $34.74, but still well below its 200-week simple moving average or "reversion to the mean" at $36.16. The 12x3x3 weekly slow stochastic reading ended last week rising to 65.03, up from 54.07 on Jan. 25.

Investor Strategy: My monthly and annual pivots are $34.97 and $34.20, respectively. Buy weakness to my semiannual value level of $32.74. Reduce holdings on strength to the 200-day and 200-week SMAs at $35.38 and $36.16, 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.