The "flight to safety" into bonds has stalled, and investors should prepare to buy on weakness.
U.S. Treasury 30-year bond yield declined to a new 52-week low of 2.38% last Thursday before ending the week at 2.60%. This week's key level to hold is 2.68% and it has Tuesday morning. The target by year end is 2.27%, vs. the record low of 2.221%, set on Jan. 20, 2015.
Investors should buy on weakness using the exchange-traded fund that tracks this bond like a stock. That ETF, the 20+ Year Treasury Bond ETF (TLT) , is a basket of U.S. Treasury bonds with maturities of 20 years to 30 years.
Comex gold spiked to as high as $1,263.9 last Thursday, setting a new 52-week high, then ended last week at $1,239.4. Gold traded as low as $1,191.5 in overseas trading on Tuesday, but is back above its key level for the week -- 1,202.7. This volatility has not altered the fact that gold has a positive weekly chart. The potential upside is to $1,638.9 by the end of the year, as the "flight to safety" remains in play. The ETF to trade as a proxy for gold is the SPDR Gold Shares ETF (GLD) , which is backed by gold bullion.
Nymex crude oil declined to a new 52-week low of $26.05 last Thursday, then rebounded to end the week at $29.44. Oil traded as high as $31.53 on Tuesday, but the key technical level of $29.90 remains in play through March as a magnet. A key level of $26.97 remains in play through February. Oil needs to have a close this week above its key weekly moving average of $33.34 to have a positive weekly chart. The upside for all of 2016 is $44.07 a barrel.
Algorithmic trades for stock futures based on crude oil were a major factor in the strong rebound for the stock market.
One of the ways to trade oil like a stock is by trading the iShares GSCI Commodity-Index Trust Fund (GSG) , which is 70% to 75% weighed to energy and crude oil.
The euro vs. the dollar has been above its 200-day simple moving average of 1.1054 since Feb. 3, and peaked at 1.1375 last Thursday. The key level for all of 2016 -- 1.1052 -- is providing stability for the euro. Weekly and monthly key levels are 1.1119 and 1.0928, respectively, with a key level of 1.1786 in play through June.
The best ETF that tracks the ups and downs of the dollar is the Deutsche Bank USD Index (UUP) , which is basket of currencies including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.
Here's the weekly chart for the bond ETF.
Courtesy of MetaStock Xenith
The bond ETF closed at $131.50 on Friday, up 9.1% year to date vs. a decline of 8.8% for the S&P 500
The weekly chart for the bond ETF is positive but overbought, with the ETF above its key weekly moving average of $126.31, and well above its 200-week simple moving average of $118.20. The weekly momentum reading ended last week at 80.75, up from 77.81 on Feb. 5, moving above the overbought threshold of 80.00.
Investors looking to buy the bond ETF should enter a good-till-canceled limit order to buy this ETF if it declines to $130.95, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should enter a GTC limit order to sell this ETF if it rises to $137.62, which is a key level on technical charts until the end of March. Investors who reduced holdings at $132.45 last week should be aware that this level is a key level on technical charts until the end of 2016, and thus should act as a magnet.