A trade idea that has its share of caveats, which are in bold…
Another one that fits with the current view of rising Treasury bonds (declining long-term yields). Real Estate (IYR) has under performed the market during the rising rate environment but has formed an interesting pattern on a daily chart. A short-term bullish view obviously assumes at least a stable broad market environment in January.
The key here would be a break above 77 and the SMA 200 which, if successful, would measure out a target of 83 or a test of the highs. IYR has risen above the 50 day averages, which is a start.
The weekly chart shows an intact uptrend and tentative rise above the EMA 45, which has been a supporting moving average during the bull market. IYR topped out when the bond market topped out (i.e. when yields stopped declining). A caution here is that IYR can drop to the bottom of its long-term channel and still be in a bull phase of higher highs and higher lows. This update is a would-be trade on the pattern above, not a long-term investment per the channel below.
More perspective comes from the monthly chart. This is a mature bull market that has pulled back due in large part to interest rate fears and I would guess, forward Trumponomic fears of breakaway interest rates.
As such, if IYR breaks above the SMA 200 and if I for one decide to play it, I am going to be strict about using the 76-77 area as a stop loss.
Buy Target: A rise above the pattern neckline and SMA 200, currently around 77.25, preferably on a weekly close.
Sell Target: 83, or anywhere lower that profit is considered acceptable.
Stop Loss: Below 77 to suit risk tolerance. Investors might wait to see if it drops to or below 70 to buy or add, with a stop loss below the 2016 low.
A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for further research if interested. I will not personally buy every item highlighted and will sometimes sell – without prior notice (because this takes time and resource away from NFTRH’s main functions) – any item that I do buy, below target, which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.