The Gold ETF Held Key Level, Commodities Near ‘Golden Cross’ As Dollar Peaks

Here are the daily charts for the gold, commodities and the dollar ETFs.

The gold 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 ($120.65 on May 17) is down just 0.5% so far in 2019 and is 8.6% above its Aug. 15 low of $111.06. GLD is trading between its 200-day simple moving average at $118.64 and its 50-day simple moving average at $121.97. The weekly chart is negative but oversold, with the ETF below its five-week modified moving average at $121.43, but above the 200-week simple moving average or “reversion to the mean” at $118.48. The 12x3x3 weekly slow stochastic reading ended last week at 19.93, down from 20.47 on May 10, falling below the oversold threshold of 20.00.

Investor Strategy: Buy weakness to the 200-day and 200-week SMAs at $118.64 and $118.48, respectively, and reduce holdings on strength to its monthly risky level at $126.01. There are semiannual and quarterly pivots at $120.36 and $122.55, respectively.

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 ($16.31 on May 17) is up 16.3% so far in 2019 and up in bull market territory 20.8% since its Dec. 26 low of $13.50 thanks mainly to the strength in Nymex crude oil. This ETF is also in correction territory, down 13.3% from its Oct. 3 high of $18.81. GSG is above its 50-day and 200-day simple moving averages at $16.22 and $16.24, respectively, so a “golden cross” is feasible. The ETF is below its quarterly risky level at $17.13. The weekly chart is neutral with the ETF above its five-week modified moving average at $16.16 and is above its 200-week simple moving average or “reversion to the mean” at $15.58. The 12x3x3 weekly slow stochastic reading fell to 71.96 last week, down from 78.15 on May 10. Commodities are no longer in an “inflating parabolic bubble” formation with this reading below 90.00.

Investor Strategy: Buy GSG on weakness to its 200-week SMA at $15.58 and reduce holdings on strength to its quarterly risky level at $17.13. Its monthly value level lags at $14.53.

The weekly chart for Nymex crude oil ($62.76 on May 17) has been downgraded to neutral with oil above its five-week modified moving average at $61.54, but with its weekly stochastic reading falling to 76.51 last week, down from 81.92 on May 10 as its “inflating parabolic bubble” ended on May 3. Semiannual and monthly value levels are $50.84 and $48.52, respectively, with weekly and quarterly risky levels at $66.24 and $68.52, 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 ($26.35 on May 17) is up 3.5% so far in 2019 and up 14% since trading as low as $23.12 in early-2018. UUP is above its 50-day and 200-day simple moving averages at $26.04 and $25.65, respectively. The weekly chart remains positive but overbought, with the ETF above its five-week modified average at $26.12 and above its 200-week simple moving average or “reversion to the mean” at $25.07. The 12x3x3 weekly slow stochastic reading ended last week at 85.33, slipping from 86.21 on May 10.

Investor Strategy: Buy weakness to annual and quarterly value levels at $25.47 and $23.89, respectively, and reduce holdings on strength to monthly and semiannual risky levels at $26.33 and $26.39, 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 Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of January, February, March and April. The quarterly level was changed at the end of March. 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 its 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% to 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.