- New Science in old markets -

REIT trade update

We advised buying into the US REIT sector on Friday. The reason for that trade was the upward break of compression clusters in a couple of the sector indices that day but these are not tradable so we advised buying an ETF that is. As usual we also advised placing a protective stop-loss calculated to limit losses to a small fixed proportion of the capital in the portfolio.

Trades that come from 'compression breaks' can usually justify tighter stops as the price should not re-penetrate the compression the other way once it has started to move. Accordingly, we now advise moving the stop to just underneath the lowest point of the blue compression bars in the two Dow indices. The ETF itself did not compress, so we select the relevant day from the two indices to establish the proper level - it is the low of the 23rd July which was 73.49 in the IYR ETF. Over the next day or so, we would move the stop up from its present level of 72.00 to a little under that price. Charts: