Sunday, October 04, 2015

Real Estate: Bet the house, but then sell it.

I made an incorrect call on real estate about two weeks ago after the full stochastic (14) indicators turned downwards which was then followed by a very bearish day two Friday's ago. What I didn't appreciate was the very narrow ascending channel it had been in prior to that which was actually wave one of a five wave ascent. The second wave down completed at around $69.50 which has now identified the larger ascending trend. I am making a bullish long/buy call on IYR to around $74.50 (this trade should be for aggressive traders only).
The timing of all this looks convenient as the current bull run comprising the final phase of the S&P's right shoulder should be about three to four weeks more, after-which we can expect the decline to resume.
An interesting article on Slope of Hope appeared over the weekend that has examined previous crashes in the last fifteen years and noted that there is always a re-test of the 20 month moving average before continuing down again. The current shoulder going in right now should be that re-test. For now an ascent is expected but short positions should be made over the coming weeks and long's unwound.
Reproduced without permission from Slope of Hope.