There is a real danger in this type of market environment for confirmation bias to overrun your trading discipline. As an example, we saw the transportation stocks outperform on Thursday, which many bulls would point to as a clear positive. At the same time, bears would argue that technology stocks lagged, and consumer discretionary was noticeably weak when compared to defensive sectors like healthcare and utilities. Seeing as the market has essentially flopped around sideways since crashing last summer, there really is “something for everyone” to interpret in their favor or bias, and yet there has been no major breakout nor breakdown that has held true.
Hence, I am focused on keeping things simple with this market and not being too convoluted in my approach. Over the past week or two, I have noted the potentially massive inverse head and shoulders bottoming formation in the IYR, ETF for the real estate sector. As you can see below, now looks to be as good an opportunity as the bulls will have to run this thing up to at least the neckline at $58. If it triggers through $55/$56, then great. If not, then it would not surprise me to just see more of the same type of trend less action indefinitely.
Also note plenty of REIT’s have similar attractive setups as well, basing just above their respective moving averages. To go with the analogy that I have been making on my video recaps recently, I view the stocks on my watchlist as ornaments on a Christmas tree, not to be taken down and played with unless I have two compelling reasons: 1) The individual setups actually trigger a breakout higher, and 2) The broad market cooperates with the idea of breakout plays working well for more than just a few hours or one trading session.
Members of The PPT and 12631 can click here for more potential long trading ideas in the real estate sector.
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Looks like a bull Flag on IYR , but I trust Real Estate as far as I Trust TEBOW as a solid Pro Quarterback.
Just my 2 Cents…..
True. Needs confirmation.
do you have any opinion on the meaning of inverse h/s patterns that are breaching to the downside in the dogs? nok rimm crap like that. same look til now. giving the indexes the benefit of the doubt but bottoming patterns are failing all over. thnxs.
Well, they have been crushed and sentiment is very negative towards them, so I wouldn’t be surprised in a reversal.
I piggy backed one of Kyle bass’s trades about a month ago. He long MTG and so did I. I believe Kyle Bass owns 5% of MTG. It’s since moved away from what I believe was the breakout point, but I’m sure it’s still a good investment.
$SPG above that key level that has been holding as resistance could go too.
Stocks and ETFs are for asshats, but that photo/caption toon is gold (pre-selloff).
Yes, thanks for the chuckle CnW! I love this blog. Usually puts me in a good mood regardless of my positions…