Real Estate: Downside Targets

IYR has reversed with a decisive ‘outside-down’ week.

This sector has likely seen its highs for the year and probably its all-time (recovery) highs.

The latest news from Steven Van Metre does not paint a good picture for the economy or the markets (bonds excepted).

Jerimiah Babe (J.B.) has also posted an update on Los Angeles. It’s a human and economic tragedy. Unfortunately, this is where the Cadillac has gone off the cliff.

We’ve continually held to the stance, there’s no recovery.

The “recovery”, is a mainstream narrative intended to keep the herd focused in the wrong direction and on the wrong things.

Judging by the hysteria with small cap short squeezes, physical silver and bitcoin (kind of hard to access when the power goes out), the promulgator to the proletariat, the mainstream media, has done an excellent job.

In fact, that is their job.

Interest rates might only need to stay elevated for a short while (a few weeks) to completely choke off any semblance of economic activity.

After that, collapse is likely to feed on itself. Even if rates eventually go back lower, it’ll be too late. The juggernaut has been set in motion.

This week had IYR posting outside-down. That in turn, added a print to the P&F chart which helped to complete a downside forecast.

Reaching the target levels puts IYR below all recent support. That support would then become resistance for any upside counter-trend action.

Ultimately, we’re looking for IYR to go below 2009, lows.

If that happens, it could take months or years. P&F charts are independent of time. They only show potential.

As provided in earlier updates, my firm is positioned heavily short IYR via DRV (not advice, not a recommendation).

From here and depending on market action, the plan is to increase that short until volatility prevents further, low risk entries.

As always, anything can happen and next week could be a miracle reversal. If so, we’ll assess price action at that time.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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