The yield on the 30-Year Treasury Bond held its 200-day simple moving average at 3.120% on Monday as the weakness in the global economy returned U.S. Treasuries to “flight to safety” status. Meanwhile, the Federal Reserve continues to tighten monetary policy by unwinding its bloated balance sheet.
The utilities stock ETF offers a dividend yield of 3.19% which makes XLU less attractive as a “flight to safety” investment.
The junk bond ETF continues to rally with stocks, but the upside should be limited to its “reversion to the mean” at $36.06. 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 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 ($121.57 on March 8) is flat so far in 2019 after setting its 2019 high of $123.86 on Jan. 3. This ETF is up 8.6% from its $111.90 on Nov. 2. TLT has a neutral weekly chart with the ETF above its five-week modified moving average of $120.63. The ETF remains below its 200-week simple moving average or “reversion to the mean” at $123.86. The 12x3x3 weekly slow stochastic reading declined to 62.53 last week down from 69.92 on March 1.
Investor Strategy: Buy weakness to my monthly value level at $116.15 and reduce holdings on strength to the 200-week SMA at $123.86. My semiannual pivot is $121.37 with my quarterly risky level is $125.62.
The Utility Stock ETF ($57.55 on March 8) is up 8.4% so far in 2019 and is 12.9% above its Dec. 26 low of $50.81. XLU has a positive but overbought weekly chart with the ETF above its 5-week modified moving average at $55.87 and above its 200-week simple moving average or “reversion to the mean” at $49.95. The 12x3x3 weekly slow stochastic rose to 82.07 last week up from 73.93 on March 1 moving above the overbought threshold of 80.00.
Investor Strategy: Investors should buy weakness my semiannual pivot at $52.38 and to the 200-week SMA at $49.95 and reduce holdings on strength to my annual risky level at $58.98. My quarterly and monthly risky pivots remain at $55.87 and $56.90, respectively.
The Junk Bond ETF ($35.40 on March 8) is up 5.4% so far in 2019 and is 7.5% above its Dec. 26 low of $32.92. JNK has a positive but overbought weekly chart with the ETF above its five-week modified moving average at $35.19 but still below its 200-week simple moving average or “reversion to the mean” at $36.06. The 12x3x3 weekly slow stochastic reading rose to 91.34 last week up from 89.81 on March 1. With the reading above 90.00 JNK has become an “inflating parabolic bubble”.
Investor Strategy: Buy weakness to my semiannual value level of $32.74 and reduce holdings on strength to the 200-week simple moving average at $36.06. My semiannual and quarterly pivots are $34.20 and $35.27, respectively.
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