Higher yields on bonds, gold and crude oil

US Treasury yields rise along with prices of gold and crude oil.

By TheStreet Staff Sep 4, 2013 11:17AM

thestreet logoHundred dollar bills surrounded by gold © Anthony Bradshaw, PhotographerBy Richard Suttmeier

 

Back on Aug. 8, I wrote "Buy bonds, trade gold and sell crude oil" and today I will update my buy-and-trade strategies for these markets.

 

The rise in the yields for the 10-year Treasury note and the 30-year Treasury bond peaked at 2.936% and 3.94% respectively on Aug. 22. The rise in yields has become overdone on their weekly chart with the 200-week simple moving averages at 2.540% on the 10-Year and 3.648% on the 30-Year.

 

My call for September is that these yields will form trading ranges influenced by new monthly pivots at 2.725% on the 10-year and 3.738% on the 30-year. The 10-year yield ended August above its pivot, while the 30-year ended the month below its pivot. The rise in yields on Tuesday has the 30-year yield above this pivot this morning.

 

This configuration normally results in reversal-oriented trading, which would not be surprising given the tendency to see a 'flight to quality' during the Syrian uncertainties and the expectation that the Federal Reserve will taper its QE3 and QE4 bond buying programs. My annual pivots have become risky levels at 2.476% and 3.014% respectively.

 

Continue to trade the bond market just like a stock using iShares 20+ Year Treasury Bond (TLT). The Treasury ETF is below its 50-day simple moving average 106.84 with the 200-day SMA a strong resistance at $116.04. The weekly chart shows an oversold condition with the 200-week SMA at $107.68. The Aug. 21 low is $102.11 with a monthly pivot at $105.75 and annual risky levels at $116.26 and $120.42. My semiannual value level lags at $92.32.

 

Comex gold set at tradable low on June 28 at $1,179.4 the Troy ounce. The daily chart shows an overbought condition with the 50-day SMA a support at $1,313.3 and the 200-day SMA a resistance at $1,503.5. My new monthly value level is $1224.6. The weekly chart profile is positive with the five-week modified moving average a support at $1361.5 and the 200-week SMA a resistance at $1,471.9. My first annual risky level is $1599.9.

 

You can trade the gold market just like a stock using SPDR Gold Trust (GLD). The 50-day SMA is a support at $127.01 and the 200-day SMA is a resistance at $145.47. The weekly chart is positive with the five-week MMA a support at $131.78 and the 200-week SMA a resistance at $143.21. My annual risky level is $153.45.

 

On Aug. 8 I suggested that if you want to buy a gold mining stock to choose Newmont Mining (NEM). This hold-rated stock traded to a multi-year low at $26.43 on Aug. 7 and traded as high as $34.27 into Aug. 27 for a low to high gain of 29.6%. Buy-and-trade investors could have captured a portion of this upside. The gold miner still has a hold rating and is 20.4% undervalued. My monthly value level is $23.63 with a weekly pivot at $33.05 and quarterly risky level at $40.92.

 

Crude oil traded as high as $112.34 into Aug. 28 but all closes since then have been below my semiannual pivot at $109.84. The daily chart is neutral with oil above its 50-day SMA at $104.96, but with a negative divergence in momentum. The weekly chart profile is positive but overbought with the five-week modified moving average at $105.66 and the 200-week SMA at $90.47. My quarterly value level is $91.75 with a monthly pivot at $105.67, the semiannual pivot at $109.84 and weekly and annual risky levels at $110.32 and $115.23. 

 

You can trade crude oil using the Energy Select Sector SPDR Fund (XLE) which has been trading sideways since testing $83.95 back on May 22. The June 24 low was $76.02, just above its 200-day SMA, then at $75.85 on a positive daily chart. The weekly chart shifts to negative given a close this week below the five-week MMA at $81.78. My quarter value level lags at $68.32 with weekly, monthly and semiannual risky levels at $84.65, $87.91 and $88.35.

 

At the time of publication the author held no positions in any of the stocks mentioned.

 

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