In the general enthusiasm for stock markets, one sector has become an orphan - US Real Estate. These charts show a popular ETF that invests in all kinds of property company assets, from commercial through agricultural and residential. All real estate is local of course but the broad trend here has been sideways for four years, with a sharp dip in the past three weeks that has pushed values down from a weekly-scale compression. This sector is particularly vulnerable to increases in interest rates and some of it is also exposed to shifts in shopping habits away from physical shops and stores to the internet. The drop has now produced bottom extensions at a daily scale that may provoke a bounce that should be sold:
As noted in the charts, Real Estate values sometimes move hand-in-hand with bond prices. We have already become bearish about bonds - see the December 27th edition and this new development in real estate brings these two views into line with one another.
All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com