The Floor May Be In for Real Estate
I know everyone and their brother has been writing about how the housing market (including myself). That is not what I want to talk about here. Instead this is a reminder that there is another big segment of Real Estate that has been a big leader, remains strong and might be at the tail end of a 8 week lateral consolidation. After strong moves markets can rest either by pulling back and working off the overbought situation or they can grind sideways. Often in stronger moves it will be sideways highlighting the battle between the bulls and the bears, or maybe it is between the profit takers and the new comers. Whatever it is the bid underneath keeps the correction shallow. I believe that might be what we are seeing in the Ishares Real Estate ETF $IYR. A look at the weekly chart shows early summer it broke out above 63 and held the second try after the first attempt failed.
Since the break out it has not returned back below 63 this time and a move down to the daily RSI chart we can better see the sideways action that has played out.
Here we see the RSI remains in a bull range and has a Positive Reversal (orange lines) that fired early August. The RSI has also remained above 50 for the majority of the consolidation. This chart suggests higher at some point. Then I move look at another daily showing the MACD is just about ready to cross higher as well.
All of this is lining up to a resumption of the uptrend soon, and when it does the Point in Figure chart below has a Price Objective of 77 so we still have plenty of room to go.
After further inspection it does look like the floor could be in for $IYR… the big problem is we don’t know what the floor is made of.
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(All market data above are derived from Stockcharts.com, Esignal, and Reutersdatalink)
