More Good News for SRS Holders
IYR has been in a nice downward channel for last 7 – 8 days. This should bode well for SRS holders. However in the near term, IYR is at the bottom of the channel – so, one needs to wait before entering. Top of the channel would converge around 34.00 by end of the day. That would mean SRS down to 18.50 or so. One needs to view this in the broader context of the entire market thought – if the indices start moving lower right at the open, then IYR will likely break out of this channel to the downside. Similarly, if the indices break out strongly to the upside, then IYR might violate this channel to the upside.
This channel is a good guide to entry in the context that markets retrace back some of the losses from Monday’s down day.
UPDATE Jun 16, 2009 3:40PM PT: It turns out that today, IYR, for most part, kept crawling along the lower trendline of the channel – it did have a spike down.. but came back up and closed pretty much around the channel.
There are two things that can happen here
- SPX gaps down and visits 880 – in that case, if you are did not enter IYR short or SRS long, then stay out. The train has already left the station. I am already long SRS with July puts – so I will keep holding on.
- SPX bounces back up to 917 or 923 or even 928 – I will start adding more SRS July calls at 923 and 928.
