Before The Open

Real Estate To Gap Higher?

It that’s the case, the first hour of trading will be the most important.

There are times, it’s rare, when a Head & Shoulders pattern will be violated, negated.

The most famous of those, was way back in 2002, when a clear H&S pattern showed the S&P was set for a major decline.

It didn’t happen. Price action ‘miraculously’ reversed; then went into another bubble in 2007 – 2008.

Years later, it was revealed it was the Fed (or those benefitting from them) that halted the H&S collapse and manipulated the market higher.

How much better for all of us, would it have been if the S&P had washed out in 2002.

Well, here we are with real estate IYR, in a similar position.

Real Estate IYR, Daily Chart

The chart has Fibonacci retrace included as well as the pre-market bid/ask spreads (noted by the orange arrows).

At this time (forty minutes before the open) IYR, shows gap-open higher; potentially into the 23.6%, retrace.

The First Hour

To maintain the short position via DRV (not advice, not a recommendation), I’m looking for a near immediate reversal of the gap-higher open (if it happens) … ideally, posting an hourly reversal bar.

Opening action like that (or similar) would indicate prices can’t be sustained at elevated levels and we’re likely to continue lower to the measured move from the last post.

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.

The Danger Point®, trade mark: No. 6,505,279

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