The Gold ETF Failed Below A Key Level As Commodities And The Dollar Gain

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Here are the weekly charts for gold, commodities and 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 ($137.39 on Nov. 8) is up 13.3% year to date and in bull market territory 23.7% above its Aug. 15, 2018 low of $111.06. The weekly chart is negative with the ETF below its five-week modified moving average at $140.38 and above its 200-week simple moving average or “reversion to the mean” at $122.26. The 12x3x3 weekly slow stochastic reading slipped to 50.38 last week, down from 58.56 on Nov. 1.

Investor Strategy: Buy weakness to its quarterly and semiannual value levels at $130.65 and $128.85, respectively, and reduce holdings on strength to its monthly pivot at $142.77.

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 ($15.64 on Nov. 8) is up 11.6% year to date and up 15.9% since its Dec. 26 low of $13.50. This ETF is 7.1% below its 2019 high of $16.83 set on April 22. The weekly chart remains positive with the ETF above its five-week modified moving average at $15.36. The ETF is above its 200-week simple moving average or “reversion to the mean” at $15.44. The 12x3x3 weekly slow stochastic reading rose to 52.85 last week, up from 48.03 on Nov. 1.

Investor Strategy: Buy weakness to its monthly value level at $15.12 and reduce holdings on strength to its quarterly risky level at $17.25.

The weekly chart for Nymex crude oil ($57.24 on Nov. 8) is positive with oil above its five-week modified moving average at $55.84 and above its 200-week simple moving average or “reversion to the mean” at $54.10. The 12x3x3 weekly stochastic reading rose to 39.68 last week, up from 36.14 on Nov. 1. Its semiannual and annual value levels are $47.93 and $38.76, respectively, with a monthly pivot at $56.05 and quarterly risky level at $69.66. Holding is monthly pivot has been the key so far this month.

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 ($26.90 on Nov. 8) is up 5.7% year to date and up 16.3% since trading as low as $23.12 in early-2018. A multiyear intraday high of $27.17 was set on Oct. 1. The weekly chart is neutral with the ETF above its five-week modified average at $26.74 and well above its 200-week simple moving average or “reversion to the mean” at $25.22. The 12x3x3 weekly slow stochastic reading slipped to 47.22 last week, down from 50.12 on Nov. 1.

Investor Strategy: Buy weakness to its semiannual and annual value levels at $25.65 and $25.47, respectively, and reduce holdings on strength to its monthly risky level at $27.33. The quarterly pivot at $26.82 remains a magnet.

How to use my value levels and risky levels:

Value levels and risky levels are based upon the last nine monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on Dec. 31. The original annual level remains in play.

The mid-year close established the second half semiannual level.

The monthly level changes at the end of each month, the latest on Oct. 31. The quarterly level was changed at the end of September.

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.