Predatory Lending = Collapse

The Top, Is In

Just like the last bubble but worse.

That’s the assessment from agents in the field on the imminent real estate implosion.

Interest rates have risen dramatically, applications have evaporated, properties not moving as before, prices are dropping, lenders deploying the last resort; Adjustable-Rate Mortgages (ARM).

When the ARMs, show up in force, it’s over.

Technical & Fundamental

Over the past several days, the real estate situation has been assessed from both a technical (chart) perspective as well as the fundamentals.

The bottom line (below), is so long, it may have to be covered in several posts.

  • On a weekly and daily close basis, IYR has contacted underside resistance.
  • On a weekly and daily close basis, IYR has contacted the right side of a downward trading channel.
  • Multiple gap-fills at IYR, 91 and 94. Volume declines over – 22.5%, on the second gap-fill.
  • Multiple rising wedge breaks on multiple time-frames signal a potential drop of – 41.5%, from current levels.
  • Trading volume contracting (as price is rising) on multiple time frames, indicates potential lack of trader commitment to higher prices.
  • Financial press gets in the game (with several reports), saying ‘now is the time to buy’.
  • As highlighted above, once the Adjustable Rates dominate, the top is in.
  • This top may be far worse than ’07 – ’08, as debt levels are much higher, consumer is tapped-out and there is a massive ‘elephant’.
  • That elephant is now going mainstream with the resultant effect of unprecedented population decline/disablement.

So, let’s get started.

Real Estate IYR, Weekly Close

Un-marked chart.

Test of underside resistance

Zoom of underside contact.

Right side trendline.

Zoom of contact points.

Trading Channel

Wedge Break: Daily Chart

Zoom of break and test

Wedge Break: Weekly Chart

Note:

A measured move to 55-area, gets IYR, back to 2020 lows. That’s a reasonable expectation for an initial leg down.

If we use Prechter’s assessment concerning bubbles (manias), price action eventually retraces every bit (sometimes more) of the entire bubble move.

That puts the ultimate destination of IYR, somewhere in the vicinity of 14.0, or lower, representing a decline of – 88%.

Closing Argument

Remember this gold breakout?

It was going to be $3,000/oz., in months, not years.

Gold-O-Mania was coming. You could even sign up and pay money to read the group-think of the imminent launch.

Well, obviously at this point, $3,000/oz., is nowhere in sight.

Gold (GLD) is even lower now than it was then. On top of that, the ‘changing of hands’ assessment has not been negated; prices continue to grind lower.

Having the financial press cheerlead at the exact wrong time, is an (almost) necessary component to identify a lasting reversal.

As we can see here and here, the financial media’s position is, we’re heading higher. There is ‘real buying’ (whatever that is) for the first time in weeks.

However, from the chart evidence presented above (and we didn’t even get to ‘gap-fills’, ‘multiple wedges’, ‘contracting volume’ … maybe later), it’s hard to present that price action will somehow move significantly higher.

Price action behavior above, appears to point to an immediate or very near-term downside reversal.

Summary

Lastly, we have this from Activist Post: Real estate housing crash in progress.

Be careful. If you read the article, can you see the ruse?

It’s been discussed before on this site. That is, the real purpose of the Fed.

All is going according to plan.

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

Weekly, Wrap-Up

The Usual Suspects

Bogart

No. 1

Airplanes Dropping Like Flies.

A very brief search of the most recent crashes or incidents are here, here, here, here, here, and here.

It’s all just a coincidence or maybe it’s because of this.

The repercussions of on-going events are just getting started.

This is a long-haul chess game.

No. 2

Americans Take Up The Gauntlet … Go To Vegas

What a pathetic bunch of cowards.

If you’re blowing whatever’s left of your money (or credit), it’s likely you have no real marketable (high pay) skills, no talent, lazy, obese; so, we’re off to Vegas.

Add to that, we’re just at the start of the depression.

Patera, from Appalachia’s Homestead (time stamp 4:24) addresses the problem a little differently but her final assessment is the same.

It’s true, there are some barriers to learning a new skill.

Dan from i-Allegedly points out the high cost to get a CDL, to be a trucker.

However, those who are awake, those with their nose in the KJV Bible, those leaving the corrupt church (in droves), knew that current events were coming; they took action way before it became obvious.

Remember this post?

It’s been nearly two years, to the day.

No. 3

Deflation Indicators

Not all prices are rising.

As the real estate sector gets vaporized, we have the natural fall-out, building materials dropping in price.

Uneducated Economist reports here, that’s exactly what’s happening.

Price reductions as we’re going into the summer building season, is a massive indicator of evaporating demand.

No. 4

Food First … Then Gold & Silver

Everything is going according to (their) plan.

Yet another indicator of the current strange weather (warfare) that’s going to strain the system.

Here’s the link to the very first post that specifically referenced Genesis 41; posted on December 31, 2020.

As with the ‘Mask on, Mask off (linked above), how has the post aged?

Is it still relevant?

What about this quote … seemed extreme at the time.

They paid for the corn first, with gold and silver.  Then they paid with their livestock.  Then they paid by selling themselves into life-long slavery. We can equate that last part (slavery) as getting the vax.

No. 5

Chess Board Strategy

It’s a bitter pill to realize we’re in the long game. ‘Normal’, is not coming back … ever.

That does not mean there’re no opportunities. There are.

Those opportunities (if we survive) are/will be potentially life changing for the good.

The Sunday futures market opened about two hours ago and we’re up around +0.40%, in the S&P.

Let’s see if that spills over to the Monday open; remembering that we’re short the real estate sector with the finger on the sell trigger (not advice, not a recommendation).

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