Charts you should be watching

 

This week, I will post a few charts that caught my eye over my weekend of perusing various securities. Please feel free to add comments regarding my observations–remember, we’re in a community of Technical Analysts, and its good to hear input from a variety of observers on the markets. In that way, we all learn!

Oil has been forming a large triangle since 2010. A breakout through $107 would be bullish for WTI crude. The near termed trend is bullish, but longer termed investors might want to wait for a breakout before getting too excited.

oil long

US banks are trending up in the longer termed charts, but recently hit the top of their regression channel on the daily chart. We held the BMO US bank ETF (ZUB-T) up until recently, and sold it at the top of this channel. Seasonally the US banks can peak in and around this time of year, and we are becoming a little concerned about the potential for an eventual correction to the bottom of the channel. We may play this one a little.

zub

Today’s good news story was yesterday’s dog. The US treasury bond, which has influenced the Canadian long bond, is bouncing of its trendline. Bragging rights here: I called it back in December. Here’s my blog suggesting bonds may bounce from December 17, 2013:  https://www.valuetrend.ca/?p=2626. Enjoy the rally, play it for the summer (seasonally the best time to hold bonds). Then take your money and run before Q4.

US long bond--macro

Canadian utilities have recovered. The BMO equal wt. utilities (ZUT-T) ETF is right back to the top of its trading range. Income investors are fine to hold this one for its 5% dividend yield. But investors who are more interested in capital gains may want to take profits at this price point. I noted about a year ago that the sector was oversold and due to return to current levels. Score on that call as well: https://www.valuetrend.ca/?p=2002

zut

REIT’s are showing a bit of recovery lately, as seen on the iShares CDN REIT ETF (XRE-T). Nice to see a recovery over the 200 day MA. I am still long-termed cautious on the sector. Last summer investors got a taste of how this sector will react when (not if) interest rates begin to rise. So while there is no sign of rising rates in the near term, longer termed investors should be aware that interest rate risk will eventually return, and REIT’s (along with bonds) will be vulnerable at that time. No panic for now–play the sector as you would the long-bond.

xre

2 Comments

  • The commitment of trader’s analysis newsletter that I subscribe to say run from crude.The U.S. is releasing oil from its strategic reserve probably in a get Putin move.

    Reply
    • Also seasonality comes to an end really soon on crude. So, the charts never let you down–if you trade only in the direction of the breakout, you will be better off. If your COT report is correct, the triangle will break to the downside.
      This might make sense from a long termed perspective–I’ve noted on prior blogs that there is a 33 year (approximate) cycle on commodities that suggests we are likely to stay in a broad commodity bear market for a few more years before the big trend changes back to bullish.

      Reply

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