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.
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.
As with Newmont Mining in the Senor Miners Index GDX, ProLogis is the largest market cap in the Real Estate Index, IYR.
When markets ‘thin-out’, when they reach the end of a long sustained bull move, capital exits the lower caps, the lesser performers, and is thrown into the last man standing; the largest cap(s) in the sector.
In can be argued, that’s where we are now with IYR.
Friday’s Wipe-Out
As expected, because of the near thousand point drop in the Dow, YouTube’s abuzz with everyone attempting to figure out what’s going to happen this coming Monday.
The Maverick does an excellent job (linked here) of posing the question, ‘Where are we’?
He doesn’t even bother with are we in a market collapse; that’s pretty much a no-brainer. It’s the ‘where’ in the collapse, that’s the question.
Real Estate … What’s Next?
From this site’s perspective, we’ll let the market itself tell us what’s likely to happen next.
Since the focus over the past week has been real estate (IYR), let’s look at the largest cap ProLogis PLD, to get clues on the next potential action.
ProLogis PLD, Weekly Chart
First, we’ll look at the big picture.
PLD was vaporized in the last market collapse.
We should also note, it took about 12-years to get back to pre-crash levels; good ‘ol ‘buy and hold’ 🙂
Of course, a multi-year covered call strategy could have been implemented if maintaining long. With that approach, PLD could have potentially become a cash-cow.
Crash Clues
Note on the chart above, PLD didn’t just up and crash; it gave clues well beforehand.
We’ll go into those clues in a later update.
For now, let’s look at next week’s probable action.
ProLogis PLD, Daily Chart
First, the un-marked chart to show where action finished up on Friday.
Next, we see an upthrust, test and sharp reversal.
Price action finished at support and just below the lows set on Monday, the 18th and Monday the 25th.
Wide, high-volume bars tend to get tested.
So, we’re below the lows with a wide high-volume bar. That puts PLD, in spring position.
Summary
Because PLD and IYR (and the rest of the indices) finished at or near their lows, there may be some downside follow-through this coming Monday.
Price action’s the final arbiter but there’s potential for some kind of upside test in the coming week(s).
As a courtesy, the DRV chart below shows the entry location for DRV-22-02 (not advice, not a recommendation) and the current stop.
Note how liquidity has picked up over the last two weeks.
Friday’s volume of 309,800 shares, was the largest ever for the inverse fund.
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.
Yesterday was the squeeze; today, prices collapsed.
We’re about mid-way through today’s session and there could be a late-day test of the down draft. Even so, the action tells us, up moves at this time, can’t be sustained.
For the first hour of today’s session, price action went straight down. Not even a hint of an upward test.
Real Estate IYR, Weekly Chart
This is how the weekly looks currently.
The 105.50 – 106.00, is an area of support.
Price action may hesitate and use that support for an attempt to move higher.
However, there may be something else at work that’s not obvious without a mark-up.
That is, IYR could be in a downward trading channel; having confirmed the right-side yesterday and today.
As Dan from i-Allegedly, has repeated time and again:
‘We’ve had warning after warning … after warning’.
He even uses that phrase in his recent video, linked here.
In his view, along with access to other real estate professionals, the set-up is worse than 2007 – 2009.
The trading channel area is zoomed-in below.
Four channel hits on the left side and two on the right.
The lowest contact spike on the left channel line to the highest spike contact on the right, is a Fibonacci 13-Weeks.
Positioning
For the most part during yesterday’s session, the short position in SRS was maintained (SRS-22-01).
However, late in the session as price action spiked higher, that position was closed and a new one opened with the 3X-Inverse fund DRV; identified as DRV-22-02 (not advice, not a recommendation).
The downward bias on a triple leveraged fund(s) is significantly higher than a two-times fund (even counting for the additional leverage).
Now that significant countertrend moves may be complete for a while, I’m taking advantage of the additional 3X leverage (not advice, not a recommendation).
There was a slight loss on the SRS-22-01, position; somewhere around -0.21 %, … not significant.
Summary
Both Dan (i-Allegedly) and Jerimiah Babe keep getting asked “When’s the collapse?”
Their responses are near identical; “You’re in it, now”.
What do they (asking the question) expect?
Do they want to have the societal, financial and we now know for sure, genocidal collapse, live streamed through their Netflix?
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.
Yesterday’s upside failure (from Monday’s reversal) tells us it’s a very dangerous market environment.
Several YouTubers (here and here) and maybe more, the leaders anyway, have noted they’re providing good-faith analysis and potential tips, but that does not change the fact, ‘You’re on your own’.
The ‘rebound’ that Maverick discussed (second link, above) may have been on Monday and that’s all there was.
Absolutely nothing against him in any way.
If that was it for a bounce, we’re indeed in a very dangerous (to the downside) situation.
The S&P got itself into a Wyckoff Up-Thrust condition, noted here and shown on the daily chart below.
S&P 500 (SPY), Daily
It’s about midway through today’s session.
We can see SPY price action grinding its way down to support near the 410 – 415, level.
Up-Thrust, headed for ‘Spring’ ?
We already know from empirical observation that markets tend to go from spring to up-thrust.
Does it work the other way around … up-thrust to spring ?
From a personal standpoint, I do not have any data to show that behavior exists.
However, with SPY in its current position (near support) we may be about to see if there’s penetration and then attempts to move higher (i.e., in spring position).
The chart below shows current support.
There would need to be decisive penetration to set up the potential for any kind of sustained rebound.
The blue line is a significant support level.
The grey line just above, is also support, where price action is at the moment.
Penetration of either one sets up a spring.
Real Estate, IYR (Daily)
While the S&P fights it out at support, real estate, IYR is doing the same thing.
The previous post was looking for new highs in the sector.
At that time, it looked to be 50/50, odds of doing so.
Now, we’re right at the danger point.
It won’t take much for price action to confirm a spring or a break to lower levels.
It looks like we’ve already had an up-thrust which seems to point probability lower.
With the overall markets, the S&P at support now and deep oversold, points the opposite way, probability to the upside.
Summary
IYR had a shallow, 38% retrace during yesterday’s session before continuing lower and closing near the low of the day.
As that retrace was completing, a short position was opened via leveraged inverse SRS (SRS-22-01) and the stop set at yesterday’s IYR high of 109.58 (not advice, not a recommendation).
As this post is completing, IYR price action’s laboring to move higher (SRS, lower).
We’ll know soon enough if we’re in a breakdown or a spring.
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 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 up–thrust‘.
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.
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.
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.
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 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.
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.
As is typical of Fed announcements, the market tends to go one way before the speech … then, the opposite way after the speech.
As real estate (IYR) pushed higher before the speech, it got just a little too far upward for comfort. The short position was closed out for one managed account.
As time progressed, price action was clearly setting up a spring condition; seen in the 30-minute leveraged inverse fund DRV, above.
The Project Stimulus Account closed its TZA position (for profit, table to follow) and the account then positioned long DRV, at about 4.49 (not advice, not a recommendation).
The stop is tight … the low of the day @ 4.42 (not advice, not a recommendation)
We’ll see what happens next
Stay Tuned
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.
If there’s a major volcanic eruption (Level VEI 5), the entire world dynamic will be changed instantly.
Not saying the La Palma eruption is another Black Swan … no, just that volcanic activity is picking up world wide and needs to be included in any ‘unforeseen’ event situation.
Real Estate (IYR)
Back at the markets, let’s see if everything’s ok in the bull camp for IYR.
The short answer is, it’s not decisive for either side as of this post
4-Hour Chart of IYR:
If we put in a Fibonacci retrace and then highlight the resistance area, it paints the picture more towards the bears:
Price action has reversed from a well defined resistance area … that just happens to be a 38.2%, retrace level.
So, we’ve got an excellent demarcation line.
If IYR price action gets significantly above the 38%, retrace, we’ll close out the DRV short (not advice, not a recommendation).
However, at this juncture, price action continues to retreat from the 38%, area. A good sign for the bears.
Stay Tuned
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.
