Skip to main content

Bond ETF reversal alert -- but will the rally continue?

This weekend's Reversal Alerts based on weekly data turned up an interesting BUY signal for an ETF I had never heard of before.

The symbol is IGOV and the ETF is the iShares S&P/Citigroup International Treasury Bond Fund. The S&P/Citigroup International Treasury Bond Index ex-US is a market value-weighted index designed to measure the performance of treasury bonds issued in local currencies by developed market countries outside the U.S.

Holdings include bonds from Japan (fully 25% of the fund), France, Italy, Germany, Austria, Canada, Australia and even the problem children like Greece, Ireland, Spain and Portugal. Credit ratings are mostly in the AA to AAA range.

Maturities are mostly short to intermediate with roughly 75% of holdings falling into the 1 to 10 year maturity range.

Regardless of the exposure to problems in Europe, this ETF has been on a roll since early June when a  multi-month downtrend reversed to the upside. The chart of daily data follows:


This chart suggests that investors have become much more comfortable holding sovereign debt lately. As stocks have fallen out of favor, bonds have received attention and IGOV seems to be benefiting from this rotation out of equities.

A technical analyst, however, might point out that on this daily chart the ETF appears over-bought according to Williams %R and Slow Stochastics. In addition, strong resistance looms above at the 200-day moving average. A move through that 200-DMA would signal a continuation in the new bullish trend. The fact that IGOV doesn't look nearly as over-bought on the weekly chart and that it has moved above resistance in the $99 range are also positives.

Given that Europe seems to be emerging from its sovereign debt crisis (Greece and Spain have been able to issue bonds at better than expected rates, confirming investors are developing some optimism on the countries sorting out their problems), perhaps IGOV really does have the potential to keep up the bull run. And compared to similar ETFs it even has a rather low 0.35% expense ratio.

If you are looking for an international bond fund that is not focused on emerging markets then IGOV might be the right ETF for you.

Disclosure: no positions

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 16, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…