Placing the Spotlight on BMO Long Corporate Bond Index ETF (ZLC.TO): Technical Stock Update

BMO Long Corporate Bond Index ETF (ZLC.TO) shares are showing strong upward momentum according to the Aroon indicator as the reading has climbed above 70.  With the strength building, investors might be taking a look at this name in conjuction with some other indicators.

The Aroon Oscillator was developed by Tushar Chande to highlight the start of a new trend and to measure trend strength. Chande first described the indicator in the September 1995 issue of Stocks & Commodities magazine. The Aroon indicator system consists of three lines: Aroon Up, Aroon Down, and the Aroon Oscillator which reflects the difference between the two. “Aroon” is a Sanskrit word meaning “dawn’s early light”.

Chande recommends the following signals:

Aroon Up level above 70 indicates a strong up-trend while Aroon Down above 70 indicates a strong down-trend. Aroon Up below 50 warns that the up-trend is weakening while Aroon Down below 50 signals that the down-trend is weakening. The two moving lower in close proximity indicates consolidation, and no clear trend.

Let’s now take a look at some additional technical levels on shares of BMO Long Corporate Bond Index ETF (ZLC.TO). The current 14-day RSI is noted at 68.34, the 7-day is 73.60, and the 3-day is seen at 82.66. The RSI, or Relative Strength Index is a popular oscillating indicator among traders and investors. The RSI operates in a range-bound area with values between 0 and 100. Many traders keep an eye on the 30 and 70 marks on the RSI scale. A move above 70 is widely considered to show the stock as overbought, and a move below 30 would indicate that the stock may be oversold. Traders may use these levels to help identify stock price reversals.

Traders may be focusing on other technical indicators for stock assessment. Presently, BMO Long Corporate Bond Index ETF (ZLC.TO) has a 14-day Commodity Channel Index (CCI) of 195.32. The CCI technical indicator can be used to help determine if a stock is overbought or oversold. CCI may also be used to help discover divergences that could possibly signal reversal moves. A CCI closer to +100 may provide an overbought signal, and a CCI near -100 may offer an oversold signal. Investors may be watching other technical indicators such as the Williams Percent Range or Williams %R. The Williams %R is a momentum indicator that helps measure oversold and overbought levels. This indicator compares the closing price of a stock in relation to the highs and lows over a certain time period.

A common look back period is 14 days. BMO Long Corporate Bond Index ETF (ZLC.TO)’s Williams %R presently stands at -2.78. The Williams %R oscillates in a range from 0 to -100. A reading between 0 and -20 would indicate an overbought situation. A reading from -80 to -100 would indicate an oversold situation.

Currently, the 14-day ADX for BMO Long Corporate Bond Index ETF (ZLC.TO) is sitting at 25.42. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would support a strong trend. A value of 50-75 would identify a very strong trend, and a value of 75-100 would lead to an extremely strong trend. ADX is used to gauge trend strength but not trend direction. Traders often add the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of a trend.

A widely used tool among technical stock analysts is the moving average. Moving averages are considered to be lagging indicators that simply take the average price of a stock over a certain period of time. Moving averages can be very helpful for spotting peaks and troughs. They may also be used to help the trader figure out reliable support and resistance levels for the stock. Currently, the 200-day MA is sitting at 18.45.

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