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Unless one lives in a cave, most everyone knows Real Estate had a good deal to do with the economic and stock market weakness in 2007 & 2008. The DJ Home Construction index was a great “leading indicator” for the economy as it started turning lower back in 2005.
From 2008 to present, the Home Construction Index and IYR have reflected a ton of relative strength as they have gained over twice what the 500 index has off the 2009 lows.
Of late both of these Real Estate based tools above, hit a key Fibonacci resistance level while creating bearish rising wedges. At (A) in the above chart, both are breaking below support. For the first time in a long time, both of these reflected relative weakness yesterday, losing almost twice what the broad market, even though the Dow was down almost 200 points. One day does not make a trend, yet this weakness should be respected a ton!
Premium and Sector Sentiment extreme members are short Real Estate. You can see why they are and get a “Free Real Estate Report” at the bottom of this post (see post and get report here)
The economy and broad market need this sector to remain strong….respect its message if it doesn’t!
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Carl…..That “2 Cents” worth of advice is worth thousands of Dollars!
Thanks for taking the time to share your thoughts-
Chris
My 2 cents: I don’t recommend leveraged ETF such as double short (SRS for example); you can obtain the same effect by buying puts on the real estate “normal” ETF IYR. The 2x or 3x ETF are losing value every day and are scam in in my opinion. But we could take advantage of that by for example shorting the opposite of the ultrashort realestate SRS: short the ultralong URE when you think IYR will decline. but I have to admit I never did that, prefer to use regular and liquid puts (or calls), easy to get in and out.
Brett…support just broke, I doubt it. REK is a 1x ETF, SRS is a 2x. For sure can short IYR or puts.
Appreciate the question and viewership Brett,
Chris
Is it to late to get short real estate here? What the best way to play it? Short IYR or puts? Thanks
GREAT JOB on your trade Carl. Appreciate you sharing, your viewership and membership.
Chris
Actually, am wrong: made $ 1475 on the trade 🙂
Waiting for an opportunity to re-enter short side now
Yeah, as a member I had followed Chris recomm on IYR and was long put until…2 days ago: became nervous and liquidated all, just before a small rally then the waterfall!!! Grrrr…but no problem as I cashed $1000 on this trade. Will be more disciplined next time. Thanks Chris!