IYR At a Possible Bounce Level

The IYR tracks the Dow Jones U.S. Real Estate Index, the ETF is comprise of 64 real estate related stocks; Simon Property Group, Public Storage, Essex Property Group, just to name a few.  What led me to look at the IYR is that it’s been down for 5 days in a row and from a numbers perspective the ETF is oversold at current levels.  Currently only 11% of the stocks within the ETF are above their 10 day moving average, and only 14% are above their 50 day moving average.  The fact that ETF’S are mean reverting vehicles this type of set up has a high probability of a 1-3 day dead cat bounce, if it opens lower tomorrow the probability increases.  But what I also noticed is that on the weekly chart the IYR is back to a level that used to be resistance that can very well act as support the first time around especially after 5 consecutive down closes, to boot that resistance level also coincides with its rising 50 week moving average (the $62.50-$62.70 level).

There are different ways to play this set up, make sure to consult your financial advisor/ guru/ broker or you can contact us at ZorCapital


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