We’ve reached the mid-year point, a time typically for reflection. Lots of columns have already been written on investments’ first semester results, so I won’t add to them. I’d rather focus on prospects for the rest of the year. And, I’ll keep it short. I don’t want to keep you from your summertime activities.
I’ll focus on the technical picture for three fundamental portfolio building blocks exemplified in popular exchange traded funds: stocks, bonds and gold.
We’ll start with the grand daddy of ETFs, the SPDR S&P 500 ETF (NYSE Arca: SPY), a portfolio which has offered mixed results for investors recently. Overall, indicators for the blue chip proxy are neutral, though there’s a long-term bullish bias. SPY is trading near the bottom of a weak rising uptrend now. At last look, the ETF was flirting with the $270 level and seems poised to take a run at resistance near $274. A breakout above this puts the ETF on a trajectory to $285 by month’s end. Failure to clear resistance would likely mean more churning as bulls and bears sort themselves out.
Over the longer-term, the ETF is setting up for a test of the $315 to $316 level. That hill won’t be taken without a fight, so bulls will need to be prepared for some volatility along the way.
On the bond side, the iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) has been roiling in the upper band of a horizontal trend. At the $121 level now, odds are high that TLT will continue to work the area between $117 and $123 this summer. Any breaks through resistance on the upside or support on the downside should be viewed with suspicion unless accompanied with a substantial increase in volume.
Near term, TLT appears overbought, but that might only signal a potential $2 give-up.
For patient traders, there’s more potential on the short side. Long-term charts show a set-up for a drop to the $104 level. Forbearance will be required while awaiting proper selling opportunities, though. Again, breakouts need to be attended by volume spikes.
Traders without the means to engage in short sales may find buying the ProShares UltraShort 20+ Year Treasury ETF (NYSE Arca: TBT) a suitable substitute, though they should be mindful of the corrosive effect of compounding with this levered portfolio.
And last, we turn to gold as typified by the SPDR Gold Shares ETF (NYSE Arca: GLD). This ETF’s been losing ground recently and, by some measures, may even be considered oversold. Still, GLD’s technical picture remains bearish in the short term and very bearish in the intermediate. Now changing hands at the $117 level, GLD could test $106 before this cycle runs its course.
Done! Now, go to the beach. We’ll check back on these markets at year’s end.
Brad Zigler is WealthManagement’s Alternative Investments Editor. Previously, he was the head of Marketing, Research and Education for the Pacific Exchange’s (now NYSE Arca) option market and the iShares complex of exchange traded funds.
