Global Trends ETF Report: IYZ, XLC, GDX

Summary

  • Weekend released ETF Trends taking into account interaction of daily charts with weekly charts, as well as, fundamental valuation considerations.
  • Designed for investors who want to do a bit more trend following by trading a portion of their ETF holdings short (few weeks) to intermediate term (few months).
  • Can also be used for new investors to scale into the Plug & Play ETF portfolio models.

The ETF Trends is an approach to buying into ETFs on our Plug & Play ETFs to ride a trend or to catch a pivot. I will try to give you 3-5 ideas each week.

Updates are published on the weekend using end of week signals. Trades should generally be made in the first half of the week. 

Included will be ETFs on our Plug & Play ETFs models, as well as, occasional select opportunities that jump out at me from TradingView screens. Use the Plug & Play as your guide to asset allocation.

Read Using ETF Trends and Technical Trading Basics: Using Overbought And Oversold Signals To Buy And Sell before getting started.

Trends

These ETFs are:

  • Not yet overbought on weekly charts.
  • Have positive momentum without being overbought on daily charts.
  • Are roughly fair valued or only slightly overvalued.

In the case of slightly overvalued ETFs, the concept is that these could become more overvalued based on technical momentum. You need to understand the risks and you must manage these positions consistently.

Do not panic buy if prices runs away from you. Remember to scale in so you can scale out later. Try to buy ETFs in uptrends on weekly charts, when the daily charts have pulled back – usually on a few down days in a week.

I think you can buy these and hold until the weekly charts become overbought. 

iShares U.S. Telecom (IYZ) has set a new uptrend and it’s my belief that telecoms will breakout as capex comes down and penetration of 5G drives revenues up. Also, consolidation of entertainment into some telecom and cable companies I think is positive. Pays a good dividend and can be appropriate for Retirement Trends accounts.

Notice that MFI is hanging near oversold as price stalls out at a key Fib. There’s not a ton of interest in this basket right now, any interest should push it even higher and possibly a breakout to new highs.

https://www.tradingview.com/x/wWhZoKgv/

SPDR Communications (XLC) which includes Google (GOOG) and Facebook (FB) has a lower dividend, but it has Google and Facebook. If XLC pulled back to about $69-70 I’d be interested if there’s no big correction going on. 

https://www.tradingview.com/x/HEHQEW6R/

A quick note here. Almost everything is at record highs and also record valuations. One trend oscillator I use rated NOTHING a buy out of nearly 200 ETFs. I’ve never seen that before. Granted many were neutral rated, but to not see a buy was a weird. If you are trying to ride a trend, be careful out there.

Pivots

These ETFs are: 

  • Oversold or nearly oversold on weekly charts.
  • Do not have positive momentum, but are just starting to come off of oversold conditions on the daily charts.
  • Are roughly fairly valued or undervalued. 

Because there is not sustained positive momentum, you run the risk of something that might be cheap, getting cheaper on technical momentum.  You need to understand the risks and you must manage these positions consistently.

Do not panic sell if price falls on you. Remember to scale in so you can scale out later. Try to buy ETFs that have started to move sideways and have a narrowing range.

I think you can buy these and hold until the weekly charts become overbought.

SPDR Gold Trust (GLD) – gold stands to rally on inflation, deflation or regulation of cyrpto. It’s trying to resume and uptrend that was interrupted last August when it hit resistance at all-time highs. I expect new highs in coming years.

I think using a rolling short-term call strategy here makes sense. Gold miners (ETF) are more levered to rising gold than gold and represent a better ETF play for pure asset allocation.

Buy calls 2-3 months in duration, just out of the money. Start to roll about 4-6 weeks from expiration before time value begins to erode rapidly.

https://www.tradingview.com/x/duCRaFDU/

VanEck Gold Miners ETF (GDX) pivoted recently and is trying to start a new uptrend. It looks likely to test the lower $40s soon and could breakout towards $50.

The companies in the ETF are in good shape and generally improving. Newmont (NEM) and Barrick (GOLD) are in extremely good shape. I think you can buy shares on most down days.

Notice that RSI and MFI are almost oversold on daily charts.

https://www.tradingview.com/x/2r8LoT8n/

Invesco Wilderhill Clean Energy (PBWis a core holding we want to own for the secular trend towards clean energy. It seems to be basing, but could have one more leg down, so scaling in is important. If you already own some, wait for a buy price at or below $79. Price falling to the $60s could certainly happen. Scale in slowly, but begin the process.

https://www.tradingview.com/x/sk4WeG9x/

Invesco Solar ETF (TAN) is a more aggressive pick than PBW, but could have a bit more upside. I like it for selling fat premium puts. On some sort of fueled rally we could use rolling call options for aggressive souls.

https://www.tradingview.com/x/b5aTBaSA/

The broad thesis on the alternative energy is that the market is going to grow by over 500% by the end of the decade. A lot of companies will see huge earnings growth.

What Do You Want Analyzed?

If there is an ETF you want me to look at, please leave a comment with why you want it analyzed and what you are seeing that makes you interested. No, “hey Kirk, what do you think of this thing?” Tell us what drew your interest.

Disclosure: I am/we are long PBW, gdx.