Real Estate (IYR) To New Highs ?

If The Bond Market Reverses

The previous bearish analysis was overwhelmed by the larger, upward trend.

Instead of continuing lower, real estate IYR, moved higher. It’s now at another inflection point.

The position in DRV (DRV-22-01) was exited at 32.66, when it was obvious the trade was going to fail.

Taking a hit like that gets one’s attention; there must be something else going on … something on a larger timeframe.

There’s nothing wrong, with being wrong.

However, there is something wrong with being wrong and staying wrong.

If we pull farther out to the longer, weekly timeframe, it looks like there’s danger ahead; possible new all-time highs and Wyckoff upthrust (potential reversal).

Real Estate IYR, Weekly

As with the Junior Miners, GDXJ, it looks like we have yet another Fibonacci time correlation.

During the financial crisis, IYR, posted its low the week of March 6th, 2009.

Thirteen years later, another major inflection point?

Shown below, is a terminating wedge that may have already completed a throw-over.

One probability suggesting new highs instead of a reversal at this point (which seems like even odds) is the repeating tendency of markets to go from ‘spring to upthrust‘.

This site has presented over and again, it’s a common market behavior.

Getting closer-in on the weekly, the spring set-up is identified.

Now, comes the Fibonacci time correlation.

From the all-time highs, the market closed at the lows on Week 8. The print low came one week later.

Using that information and projecting forward, if this correlation is in effect, if it’s valid, we can expect an up-thrust high somewhere during the week of May 20th, to May 27th.

The Bond Connection

The economy is collapsing. The food supply is being destroyed. The consumer is tapped out and using credit to survive.

What on earth could be a catalyst to move real estate, the most illiquid market of all, to new highs?

Bring in the clowns … sorry, the financial press.

Word on the street is the bond market, may be in position to reverse higher.

No doubt, there’s a good technical reason for reversal, linked here.

It’s the financial press and their real estate narrative that will (may) be preposterous.

That is: If bonds (TLT) move higher, mortgage rates will come down, consumers will jump on the opportunity and therefore, she’s a witch !!!

Summary

We’ll see if IYR meets the price and Fibonacci time correlations for potential reversal.

Once there’s a reversal in this market, it tends to do so with a vengeance.

Rising rates have already cut off deals in the works. Prices are coming down and houses are on the market longer. The consumer is priced out.

The pig is already in the python … once that happens, this market sets up a dynamic of its own, a succession of lower prices and sales collapsing.

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

Real Estate … By The Numbers

Day By Day Look, At Potential Reversal

Using a method presented by the late David Weis in his training video (still available, linked here), we’re going to look at specific days on the daily chart of IYR, shown below.

In brief, the method looks at price action (and volume) on specific days, then formulates an assessment using Wyckoff analysis, on next move probability.

Real Estate, IYR, Daily

This is how it looks with no markup. Force Index, shown in the lower panel.

We’re going to address each numbered bar of the price action shown.

No. 1

Price action penetrates resistance (blue line) on moderate volume and posts a sharp upward spike on Force Index.

Such action can be labeled as a breakout or up-thrust (potential reversal) position.

No. 2

After hovering and then testing the breakout resistance/support level, price action attempts to pull away and move higher … but it’s unable to close higher and volume contracts.

Force Index as a result, posts a significantly lower peak than three trading sessions, prior.

This is the first sign of trouble to the upside.

No. 3

Three sessions later, IYR attempts to move higher again.

This time it’s able to close higher but volume contracts again and posts a lower Force Index.

This is the second sign of trouble to the upside.

No. 4

Five sessions later after IYR comes back down to resistance/support there’s another attempt to move higher.

This time, the range has narrowed while volume increases and subsequently posts yet another lower peak on Force Index.

Narrow, labored upside action with increasing volume suggests the market’s under distribution.

Summary

The day before price action bar No 4., this post was created to indicate real estate IYR, may be in position for downside reversal.

On the day labeled No. 4, a short position was opened via leveraged inverse fund DRV as DRV-22-01, with current stop at last Thursday’s DRV low of 32.64 (not advice, not a recommendation).

Heading Into Monday

The futures market is now about one hour into the Sunday night session.

The S&P is trading down 15 – 16 points or about – 0.36%.

Let’s see if that negative bias carries over to the Monday open.

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

Bonds Down … Real Estate, Next ?

Visions of 2008 ?

The Head & Shoulders pattern on the weekly chart of IYR, could mean reversal ahead.

Price action’s been attempting to move higher over the past twelve trading days.

‘Attempting’, because it’s not making any significant net progress.

Essentially, we’ve got what’s called ‘evidence of a struggle’ where the bulls may be exhausting themselves.

The last update on bonds (TLT), said they’re at the danger point where an upside reversal was possible.

That update also said:

“At this juncture, there’s either a reversal and much higher levels or down, with rates higher; in turn, leading to the subsequent collapse of real-estate, a-la 2007 – 2008.

Since then, bonds are lower, rates higher. Housing affordability has collapsed.

Real Estate, IYR, Weekly

At this point it’s a clear H&S, pattern.

The daily chart shows IYR, oscillating around an axis, support/resistance line; struggling to move higher (in up-thrust condition) with no real progress.

As with bonds in the April 3rd, update, we’re at the danger point with IYR.

A decisive move below the axis (blue) line would indicate the bulls may be exhausted.

Because price action’s been in this range for over two weeks, lends support to the possibility any breakdown (or breakout higher), may be a sustained, directional move.

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