Bonds And Utilities Are Range-Bound As Junk Bonds Follow Stocks Higher

The yield on the 30-Year Treasury Bond is on the rise again since trading as low as 2.791% on March 28. The 200-day simple moving average is 3.101% setting a trading range. Semiannual and monthly value levels are 3.052% and 3.062%, respectively, with a quarterly pivot at 2.813%.

The utilities stock ETF offers a dividend yield of just 2.96%, below 3%, so investors should prefer the “Dogs of the Dow” instead.

The junk bond ETF is following stocks higher, but beware that at last week’s testimony, CEOs of major banks view the huge supply of corporate bonds a risk to be concerned about.

Here are daily or weekly charts for these ETFs

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

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.

Courtesy of Refinitiv XENITH

The Treasury Bond ETF ($122.67 on April 12) is up just 1.0% so far in 2019 and set its 2019 high of $126.69 on March 28. This ETF is up 9.6% from its 2018 low of $111.90 set on Nov. 2. TLT has a negative weekly chart with the ETF below its five-week modified moving average of $122.85 and below its 200-week simple moving average or “reversion to the mean” at $123.96. The 12x3x3 weekly slow stochastic reading slipped to 73.15 last week, down from 74.07 on April 5.

Investor Strategy: Buy weakness to its semiannual and monthly value levels at $121.37 and $121.09, respectively, and reduce holdings on strength to its quarterly risky level at $126.41.

The Utilities Select Sector SPDR Fund (NYSEARCA:XLU)

Courtesy of Refinitiv XENITH

The Utility Stock ETF ($58.21 on April 12) is up 10.0% so far in 2019 and is 14.6% above its Dec. 26 low of $50.81. XLU has a positive but overbought weekly chart with the ETF above its five-week modified moving average at $57.45 and well above its 200-week simple moving average or “reversion to the mean” at $50.31. The 12x3x3 weekly slow stochastic slipped to 89.21 last week, down from 90.39 on April 5, and still above the overbought threshold of 80.00. The sentiment reading was above 90.00 as the Utilities ETF became an “inflating parabolic bubble.”

Investor Strategy: Investors should buy weakness to its semiannual pivot at $52.38 and to the 200-week SMA at $50.31 and reduce holdings on strength to its annual risky level at $58.98. I show monthly and quarterly pivots in between at $57.53 and $55.82, respectively.

SPDR Bloomberg Barclays High Yield Bond ETF (NYSEARCA:JNK)

Courtesy of Refinitiv XENITH

The Junk Bond ETF ($36.22 on April 12) is up 7.8% so far in 2019 and is 10.0% 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 $35.73 and now above its 200-week simple moving average or “reversion to the mean” at $35.98. The 12x3x3 weekly slow stochastic reading rose to 96.15 last week, up from 94.79 on April 5, maintaining the status of an “inflating parabolic bubble” with a reading above 90.00.

Investor Strategy: Buy weakness to its quarterly, monthly, annual and semiannual value levels of $35.10, $34.84, $34.20 and $32.74, respectively, and reduce holdings because of the parabolic bubble formation.

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.