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Weaker Economic Data Set Up a June Swoon for Stocks and Bonds

Stocks in this article: DIA SPY QQQ IYT IWM TLT

NEW YORK (TheStreet) -- Investors have brushed off the unexpected 1% decline in first-quarter gross domestic product, the continued below-neutral readings for consumer sentiment, and Friday's weaker-than-expected consumer spending release.

In my view, however, these negative reports more than offset better-than-expected purchasing manager readings, because the consumer represents about 70% of the economy.

That means the Federal Reserve is likely to keep the federal funds rate at 0% to 0.25% longer than previously expected, and easy money has been a positive for both stocks and bonds.

Even so, broad measures of the stock and bond markets are becoming overbought on their weekly charts, and investors may want to book profits now before a potential June swoon.

The five key U.S. equities indices are ending May in sync with positive weekly chart profiles, but only the S&P 500 and Dow transports set new highs on Thursday. The Dow Jones Industrial Average set its all-time high in mid-May with the Nasdaq and Russell 2000 setting multiyear and all-time highs in early March.

One twist is that the Wall Street call to "avoid bonds" has been wrong this year.

Even as the S&P 500 and Dow Jones transport index are setting new all-time highs going into the end of May, the exchange-traded fund that tracks long-term U.S. Treasury bonds (iShares 20+ Year Treasury Bond ETF (TLT)) has fared even better.

Investors with ETF portfolios should include a bond ETF in their holdings, as these ETFs allow investors to gain exposure to the bond market with a security that trades just like a stock.

Two "Crunching the Numbers" tables follow profiles of ETFs that track broad markets. Note that all of these ETFs are above their five key moving averages, a sign of upward momentum.

SPDR Dow 30 ETF (DIA) ($166.78, up just 0.8% YTD) set an all-time intraday high at $167.29 on May 13 after trading below its 200-day simple moving average with a 2014 low at $153.12 on Feb. 5.

The weekly chart for this ETF, which is also known as "Diamonds," is positive but overbought with its five-week modified moving average at $164.65. Quarterly and semiannual value levels are $164.18 and $162.05, respectively, with semiannual and monthly risky levels at $167.82 and $173.79, respectively.

SPDR S&P 500 ETF (SPY) ($192.37, up 4.2% YTD) set an all-time intraday high at $192.40 on Thursday and is well above its 200-day SMA at $179.56. The S&P Spider has not been below its 200-day since November 2012.

The weekly chart is positive but overbought with its five-week MMA at $188.27. Quarterly and semiannual value levels are $185.03 and $179.50, respectively, with a monthly risky level at $200.33.

PowerShares QQQ Trust ETF (QQQ) ($91.30, up 4.2% YTD) set a multiyear intraday high at $91.36 on March 7 and is knocking on the door for a new high Friday. This ETF, which tracks the Nasdaq 100, is being helped by the resurgence of the momentum stocks such as Apple (AAPL) and Google (GOOGL). This ETF has been above its 200-day SMA since January 2013.

The weekly chart is positive with its five-week MMA at $88.37. Quarterly and semiannual value levels are $83.62 and $80.72, respectively, with a monthly risky level at $96.62.

iShares Transportation ETF ($145.35, up 10 YTD) set an all-time intraday high at $145.36 on Thursday and has been above its 200-day SMA since December 2012.

The weekly chart is positive but overbought with its five-week MMA at $139.31. Quarterly and semiannual value levels are $132.17 and $131.89, respectively, with a monthly risky level at $149.61.

iShares Russell 2000 ETF (IWM) ($113.37, down 1.7% YTD) set an all-time intraday high at $120.58 on March 4. Since April 15, this ETF, which tracks a well-known small-cap index, has traded back and forth around its 200-day SMA since, and that SMA is now at $111.19.

The weekly chart is positive given a close today above its five-week MMA at $112.33. Semiannual and annual value levels are $112.56 and $96.09, respectively, with quarterly and monthly risky levels at $115.72 and $125.10, respectively.

iShares 20+ Year Treasury Bond ETF (TLT) ($114.15, up 12.1% YTD) set a 2014 intraday high at $115.19 on Thursday and has been above its 200-day SMA at $106.60 since March 12.

The weekly chart is positive but overbought with its five-week MMA at $111.81. A monthly value level is $109.23 with an annual pivot at $114.98 and quarterly and annual risky levels at $115.64 and $116.12, respectively.

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