'Flight to Safety' Investments in Treasury Bonds, Gold, Utilities Remain Viable Choices

Investors have several choices when it comes to making "flight to safety" portfolio choices but the obvious core holdings are U.S. Treasury bonds, gold, utility stocks and junk bonds. The best investment for 30-year U.S. Treasury bonds is the 20+ Year Treasury Bond ETF ( (TLT) ). Gold bullion is best traded using the SPDR Gold Shares ETF ( (GLD) ). Investors seeking dividends invest in the Utilities Select Sector SPDR Fund ( (XLU) ).

Investors interested in junk bonds can trade the SPDR Barclays High Yield Bond ETF ( (JNK) ). Typically, junk bonds perform in tandem with stocks, not bonds. Corporate debt is at a record high so it's not prudent for investors to stretch for yield, but this exchange-traded fund can be traded.

Observe the 200-week simple moving averages as these are the "reversion to the mean" for each exchange-traded fund. The "reversion to the mean" is an investment theory that the price of an ETF will eventually return to a longer-term simple moving average. A logical choice that's easy to track is the 200-week simple moving average. A ticker trading above its 200-week simple moving average will eventually decline back to it on weakness. Similarly, a ticker trading below its 200-week simple moving average will eventually rebound to it on strength.

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Here's A Scorecard for the 'Flight to Safety' ETFs
Here's A Scorecard for the 'Flight to Safety' ETFs

The S&P 500 ( ) has a gain of 7.2% year-to-date, up a notch from 7.1% a week ago. The U.S. Treasury bond ETF is up 2% year-to-date versus 1.3% a week ago. The gold bullion ETF has a gain of 7.3% year-to-date, up from 5.9% a week ago. The utilities stocks ETF has a gain of 6.2% year-to-date, up from 5.7% a week ago. The Junk Bond ETF is up 2.1% year-to-date up from 1.3% a week ago.

The 20+ Year Treasury Bond ETF (TLT)
The 20+ Year Treasury Bond ETF (TLT)

Courtesy of MetaStock Xenith

The yield on the 30-year U.S. Treasury bond continues to trade in a range from a high of 3.215% on March 14, to a low of 2.824% on April 18. My semiannual value level is 3.302% with a quarterly pivot of 3.089% and a weekly risky level of 2.834%. The bond yield is above its 200-day simple moving average of 2.795%, and is now just below its 50-day simple moving average of 3.010%.

The U.S. Treasury 30-Year Bond trades like a stock using the 20+ Year Treasury Bond ETF, which 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 weekly chart for the Treasury Bond ETF (TLT) ($121.51 on May 16) will be neutral if the ETF ends the week above its key weekly moving average of $121.49. The bond ETF has been trading back and forth around its 200-week simple moving average of $120.69, which is the "reversion to the mean". Weekly momentum is projected to slip to 64.47 this week down from 66.80 a week ago. Buy weakness to my quarterly value level of $120.23, which was tested on May 11. My semiannual value level lags at $115.92. Sell strength to my weekly risky level of $124.86.

The Gold Bullion ETF (GLD)
The Gold Bullion ETF (GLD)

Courtesy of MetaStock Xenith

Comex gold set an election trading range from as high as $1,338.3 on Nov. 9 to as low as $1,124.3 on Dec. 15. The 2017 high is $1,297.4 set on April 17. My monthly value level of $1,171.9 with a quarterly pivot is $1,233.2 and a weekly risky level of $1,278.4. The quarterly pivot has been a magnet and my annual risky levels remain $1,660.1 and $1,674.1.

Investors can trade gold like a stock using the SPDR Gold Shares ETF, which is backed by gold bullion.

The weekly chart for the Gold Bullion ETF (GLD) ($117.65 on May 16) is negative with the ETF below its key weekly moving average of $118.45 and below its 200-week simple moving average of $118.47, which is the "reversion to the mean". Weekly momentum is projected to slip to 57.27 this week down from 67.58 a week ago. Buy weakness to my monthly risky level of $111.66. My quarterly pivot is $116.89. Sell strength to my weekly risky level of $121.54.

The Utilities ETF (XLU)
The Utilities ETF (XLU)

Courtesy of MetaStock Xenith

Dow utilities set its post-election low of 616.19 on Nov. 14 and set its post-election high of 711.47 on April 27. My monthly and annual value levels are 691.71 and 679.56, respectively, with a quarterly pivot of 704.56 and weekly and semiannual risky levels of 707.71 and 732.56, respectively.

Investors seeking the safety of dividends can trade the utilities ETF, which is a basket of 28 utility stocks.

The weekly chart for the Utilities ETF (XLU) ($51.57 on May 16) remains positive but overbought with the ETF above its key weekly moving average of $51.47. The ETF is above its 200-week simple moving average, or the "reversion to the mean" of $44.77. Weekly momentum is projected to slip to 82.34, still above the overbought threshold of 80.00. Buy weakness to my monthly value level of $50.64. My annual, quarterly and weekly pivots are $50.72, $51.19 and $52.08, respectively. Sell strength to my semiannual risky level of $54.29.

The Junk Bond ETF (JNK)
The Junk Bond ETF (JNK)

Courtesy of MetaStock Xenith

The High Yield Bond ETF is for investors betting that junk bond yields will tighten against U.S. Treasuries. Remember that the performance of junk bonds correlates more to the stock market, not to the bond market.

The weekly chart for the Junk Bond ETF (JNK) ($37.22 on May 16) is positive with the ETF above its key weekly moving average of $36.97. The ETF has been below its 200-week simple moving average since the week of Nov. 14, 2014, with the average now at $38.04. Weekly momentum is projected to end the week at 76.50 up from 70.25 a week ago. Buy weakness to my semiannual and quarterly value levels of $35.14 and $33.00, respectively. My weekly and monthly pivots are $37.16 and $36.99, respectively. Sell strength to the 200-week simple moving average of $38.04.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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