The Gold And Dollar ETFs Set New 2019 Highs As Commodities Lag
The Gold Shares ETF set its 2019 high of $146.13 on September 3, with its all-time high of $185.85 a long-term target.
The commodities ETF continues to trade below its "reversion to the mean" now at $15.41.
The long dollar ETF remains set on its 2019 high of $27.01 on September 3, testing its monthly risky level for September at $26.99.
Here are the weekly charts for the gold, commodities and dollar ETFs.
The Gold Trust ETF tracks the spot price of gold and is said to be backed by gold bars in vaults in London.
SPDR Gold Trust ETF (NYSEARCA:GLD)
Courtesy of Refinitiv XENITH
The Gold ETF ($143.75 on August 30) is up 18.6% year to date and in bull market territory, 29.4% above its August 15, 2018 low of $111.06. The weekly chart remains positive but overbought, with the ETF above its five-week modified moving average at $138.55 and above its 200-week simple moving average or "reversion to the mean" at $120.37. The 12x3x3 weekly slow stochastic reading rose to 92.81 last week, up from 91.77 on August 23. This reading above 90.00 puts GLD in an "inflating parabolic bubble."
Investor Strategy: Buy weakness to its semiannual value level at $128.85 and reduce holdings on strength to $185.85, which was the high set during the week of September 9, 2011. My monthly pivot for September is $138.57
The commodity ETF is heavily weighted to energy by about 60%.
iShares S&P GSCI Commodity-Indexed Trust ETF (NYSEARCA:GSG)
Courtesy of Refinitiv XENITH
The Commodities ETF ($14.82 on August 30) is up 5.6% year to date and up 9.8% since its December 26 low of $13.50. This ETF is also in bear market territory, 21.2% below its October 3 high of $18.81. The weekly chart remains negative, with the ETF below its five-week modified moving average at $15.06 and below its 200-week simple moving average or "reversion to the mean" at $15.42. The 12x3x3 weekly slow stochastic reading slipped to 27.29 last week, down from 30.46 on August 23.
Investor Strategy: Reduce holdings on strength to its monthly and quarterly risky levels at $16.99 and $18.23, respectively.
The weekly chart for Nymex crude oil ($54.71 on August 30) has a neutral weekly chart, with oil below its five-week modified moving average at $55.45 and above its 200-week simple moving average or "reversion to the mean" at $53.31, which has been a magnet. The 12x3x3 weekly stochastic reading rose to 39.00 last week, up from 37.85 on August 23. Its semiannual and annual value levels are $47.93 and $38.76, respectively, with monthly and quarterly risky levels at $68.34 and $75.38, 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.
Invesco DB USD Bullish ETF (NYSEARCA:UUP)
Courtesy of Refinitiv XENITH
The Dollar ETF ($26.87 on August 30) is up 5.6% year to date and up 16.2% since trading as low as $23.12 in early 2018. A multi-year intraday high of $27.01 was set on September 3. The weekly chart remains positive, with the ETF above its five-week modified average at $26.52 and above its 200-week simple moving average or "reversion to the mean" at $25.16. The 12x3x3 weekly slow stochastic reading rose to 75.55 last week, up from 71.82 on August 23.
Investor Strategy: Buy weakness to its annual value level at $25.47 and to its 200-week SMA at $25.15. Reduce holdings on strength to its monthly risky level at $26.99, which was tested at the September 3 high. Annual and semiannual pivots are $25.47 and $25.65, respectively.
How to use my value levels and risky levels
Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on December 31. The original annual level remains in play. The weekly level changes each week. The monthly level was changed at the end of each month, the latest on August 30. The quarterly level was changed at the end of June. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility, investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before their time horizon expires.
How to use 12x3x3 Weekly Slow Stochastic Readings
My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years. The stochastic reading covers the last 12 weeks of highs, lows and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading, and I found that the slow reading worked the best. The stochastic reading scales between 00.00 and 100.00, with readings above 80.00 considered overbought and readings below 20.00 considered oversold. Recently, I noted that stocks tend to peak and decline 10-20% and more shortly after a reading rises above 90.00, so I call that an "inflating parabolic bubble," as a bubble always pops. I also call a reading below 10.00 as being "too cheap to ignore."
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.
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