by Steve Auger
Asset Hound Introduction
Welcome to the first edition of Asset Hound! This report is issued monthly and provides Stock Market Students an introductory to technical analysis of Exchange Traded Funds (ETF) in the following areas: Equal weighted U.S. Equities (VTI), International Equities (EFA), U.S. Real Estate (VNQ), Commodities (DBC) and Treasury Bonds (IEF). The analysis is based on weekly charts.
Asset analysis should be used to determine the overall percentage allocation of an investor's portfolio to each asset. Once this is determined then the investor can substitute his or her favorite stocks in place of the associated ETF. For example, if the asset allocation indicates that the investor should be in U.S. Equities then he or she could substitute any U.S. stock(s) in place of VTI ETF. The asset analysis is provided monthly so that the investor isn't constantly adjusting their percentage asset allocation.
Asset Analysis Summary
Asset Class
|
ETF
|
Status
|
Technical Analysis
|
Brkout
|
Brkdown
|
U.S. Stocks
|
VTI
|
|
|
>$70
|
<$66
|
Intl Stocks
|
EFA
|
|
|
>$55
|
<$50
|
Commod.
|
DBC
|
|
- Symmetrical Triangle
- Wlliams%R bearish (S.T.)
- OBV bullish (L.T.)
|
>$28.50
|
<$26.50
|
Real Estate
|
VNQ
|
|
- Ascending Triangle (bullish)
- Williams%R trend (S.T.)
- OBV bearish (L.T.)
|
>$63
|
<$60
|
Treasury Bonds
|
IEF
|
|
- Ascending Triangle breakout (bullish)
- Williams%R (S.T.)
- OBV bearish (L.T.)
|
N/A
|
<$104
|
Vanguard Total Stock Market
ETF Symbol: VTI
T
he Vanguard Total Market VIPERs ETF has formed an ascending triangle and must soon decide which direction to proceed. If VTI reaches $70 then the ETF will be entering a new bullish trend. Below $66 will be in a breakdown situation.
iShares MSCI EAFE Index Fund
ETF Symbol: EFA
The iShares MSCI EAFE Index Fund has formed a symmetrical triangle - it is not clear which direction this ETF will go from here. The Williams%R show a likely pullback (short term) while the On Balance Volume appears to be forming bullish divergence (long term). If the ETF does break out from the triangle then it will encounter resistance at the $54.50 level. Don't consider a long entry until the resistance level is broken. On the bearish side, a short entry below could be considered.
PowerShares DB Commodities Tracking Index Fund
ETF Symbol: DBC
The PowerShares DM Commodities Tracking Index Fund is showing a symmetrical triangle and has recently encountered resistance at the $28.30 level. A break above $28.39 would be considered bullish. Williams%R is indicating a short term pullback. On Balance Volume is showing a possible longer term bullish divergence from the price chart. A price below $26.50 would be considered a breakdown.
Vanguard REIT Index ETF
ETF Symbol: VNQ
The Vanguard REIT VIPERs is indicating an Ascending Triangle. The price is currently rubbing noses with the resistance level of $62.30. A break above this level would be very bullish. This is supported by the Williams%R which is showing a possible trend condition. The On Balance Volume on the other hand indicates possible long term bearishness. Below $60 would be considered a breakdown.
iShares Barclays 7-10 Year Treasury Bond Fund
ETF Symbol: IEF
The iShares Barclays 7-10 Year Treasury Bond Fund has broken out of an ascending triangle, a very bullish move. WIlliams%R is showing a trend condition. The On Balance Volume indicator is exhibiting a possible bearish divergence with the ETF price. For now it is all systems go!
he Vanguard Total Market VIPERs ETF should be initiated as there is a very consistent Zig Zag pattern turning that has turned upward. Williams%R is also turning up after being oversold. A protective stop should be placed at $68.75.
