IYR (chart courtesy of FreeStockCharts.com)
Friday, January 29, 2010
As you've noticed, with the boost in volatility lately I've been showing intra-day trading activity. I use Screenr to record my computer screen. Below I presented live intra-day trading activity of IYR (iShares Real Estate ETF) inside a bearish "descending triangle", where price makes lower highs after an initial spike and rides floor support towards the downtrend vertex point. Learn more about descending triangles at Stockcharts.com Chart School. Obviously breakouts/breakdowns fail half the time so trades warrant a decent stop and/or hedge imo. In this case downside momentum was dominating the market so I thought there was better risk/reward on the downside. It ended up taking out support. I've seen this work (and fail) across many different time frames. It is just analyzing the supply/demand of stock (via traders) over time measured in price. I was thinking that a long term example would be if the S&P tested the 2002/2009 lows again and broke down right at the 2007 downtrend. Hopefully the downtrend demon from 2007 gets violated soon so we don't have to experience that. If it does happen I'm sure it would be priced in gold not Dollars. The high speed rail idea could boost jobs and economic activity... First is a live streaming video of IYR and then a snapshot of IYR at the close (chart from freestockcharts.com).