IYR Elliott Wave Analysis: Pullback can Provide Buying ChanceHello Traders,
In this Elliott Wave Analysis, we will have a look at the Real Estate ETF (IYR).
IYR ended the cycle from 03/23/18 (72.71) low at the peak of 07/06/18 (82.20) in blue wave (3). Below from there, the ETF ended the correction from 07/06/18 (82.20) peak in blue wave (4) at 79.23 low. Up from there, it broke already to new highs, confirming that the next extension higher has started.
Near-term IYR ended the correction from 07/06/18 (82.20) peak in blue wave (4) at 79.23 low. The internals of blue wave (4) unfolded as Elliott Wave double correction which ended red wave W at 07/18/18 low (79.76), red wave X pullback at 07/19/18 peak (81.26) and red wave Y of blue wave (4) at 07/25/18 (79.23).
Up from there, the ETF ended the cycle from 07/25/18 low in red wave A at 08/06/18 (82.50) peak. The internals of that move unfolded as a leading diagonal where it ended black wave ((i)) at 07/26/18 low (81.01), black wave ((ii)) pullback at 07/30/18 low (79.24), black wave ((iii)) at 07/31/18 peak (81.51), black wave ((iv)) at 08/01/18 low (80.15) and finally black wave ((v)) of red wave A at 08/06/18 peak (82.50). The ETF is currently in the progress of correcting the cycle from 07/25/18 low (79.23) in 3-7 or 11 swings in red wave B.
Near-term focus remains towards 81.03-80.81, which is 100%-123.6% Fibonacci extension area of black wave ((w))-((x)) to end red wave B pullback. Afterwards, the ETF is expected to find buyers for red wave B higher ideally or should do a 3 waves reaction higher at least. We don’t like selling it into a proposed pullback as the right side remains to the upside.
IYR trade ideas
IYR, Daily, BearishThere's a triple divergence on the IYR chart (U.S. Real Estate ETF).
1. First high
2. Second high, lower high on MACD
3. Third high, even lower high on MACD
There is some space between 1. and 2. on the MACD. I would appreciate if anyone knows whether the MACD gap would disqualify 1. as the first high in a divergence analysis.
Watching real estate!!Hello friends
It's been a while since i posted. I been enjoying summer and doing some activities with family and friends. Man i am not sure if i posted about italian 10 year yields but it paid off quite well. They are ripping and it was very nice monthly chart. I am watching reit's as rates are rising and chart pulled back quite a bit. Looking for proper short sell signal to take advantage of move lower. Looking for dxy pullback here and some gold and silver strength. I am in EDR - silver etf which took off and is consolidating now. I'll keep you posted if i see interesting chart in forex. There has been some nice moves lately in usdjpy, gbpaud and eurusd.
Thank you for the read and enjoy.
Take care
IYR Weekly - interesting locationJust an observation on the real estate ETF while I was reading up on the US mortgage debt and its connection to real estate stocks.
Intriguing as I learn more this. IYR is in an very interesting spot.
Apparently, the current mortgage debt levels are similar to levels leading up to the 2008 crash.
fred.stlouisfed.org
Neutral trade on IYR,58% probability (Strangle)The Implied Volatility Rank of IYR is at 65 and with a down move of around 6% in the last 20 days, I expect we are going to start a correction soon around the value area. So I decided to sell a Strangle to collect some premium. With 37 days to expiration I Sold the 80/76 Strangle for 0.95 credit. That will give me a 58% probability to make money, but if I close it when the price of the strangle reach 0.48 my probabilities jump to 80%, so that's the plan.
The Trade:
Expiration = Feb 16
Sell 80 Call
Sell 76 Put
Credit Received = $0.95 ea
Probability of profit 58%
Thoughts of Real EstateHi guys. I don't own real estate being a headache as it is but I gladly look at the real estate index when it seems to hit some support. Cultivating politeness, love, and light brings us positive vibrations. Thank you friends.
P.S. Confirmations matter (e.g. higher low and higher high).
THE SHORT PUT-ACQUIRE/KEEP PREMIUM-COVERED CALL CYCLEI have touched on this topic before in separate posts, but thought I'd refresh the notion of what I like to call "strategic acquisition" here, since I get repeatedly asked about how I go about acquiring shares in an underlying I actually really do want to buy and hold, usually for an indefinite period of time (we're talking years here). The focus of these acquisitions is not on growth (although that's sure always swell), but on the dividends owning the shares provide plus any premium I collect that reduces my cost basis. This may seem "radical" ("What?! You're not acquiring the shares for growth potential! Ridiculous!"), but the fact is that you cannot count on growth ad infinitum , and if you're going to bail on your dividend earning positions "intermittently" as they appear to run out of steam to the upside, then the whole purpose for owning the shares in the first place -- dividends plus cost basis reducing short call premium -- is somewhat out the window.
All that being said, here's the basic cycle:
1. Sell 30 delta puts.* Depending on your account size, how aggressive you want to be, and how patient you are, you can sell one contract, 45 days-'til-expiry or ladder these out in time (e.g., one at the November expiry 30 delta; one in the December at the 30; one in January at the 30).
2. Allow the short put(s) to go to expiry.
(a) If price is above the short put at expiry, the short put expires worthless, and you keep the premium you received for selling it. You can then re-up the position in the next monthly at the 30 delta, and then lather, rinse, repeat the process. If you've laddered out; you can re-up in the back month at its 30 delta.
(b) If price is below the short put strike at expiry, you are assigned shares, after which you proceed to sell call(s) against them to reduce your cost basis over time. I generally sell the 20-30 delta short call against, and then roll the short call for duration when it has decreased significantly in value or-- if it has been broken -- to keep it clear of current price (because I want to hold on to the shares; I don't want them called away).** You can naturally continue to sell short puts if you want to continue acquiring additional shares at lower prices.
* -- Naturally, selling a given 30 delta may not be where you would want to ideally acquire, so having a fairly long list of underlyings with "ideal" buy points is a good idea. While you're waiting for some, others may be "ripe." For me personally, I generally stick to a small number of comparatively high yield exchange-traded funds -- e.g., EFA, TLT, IYR, SPY, but I'm fine with waiting months for potential buy points and/or am willing to sell 30 deltas on a quarterly basis as compared to forty-five days out in time to get strikes more distant from current price than a 45 day 30 delta would be (compare SPY November 17th 244 short put (28 delta) with, for example, the March 29th (Quarterly) 237 (29 delta)).
** -- When rolling a short call out for duration, you always want to roll for a credit. If you want to attempt to improve the strike, you generally have to roll out further in time to do this, which is naturally okay in this case, since you want to hold onto the shares for the dividends. However, you don't want to roll out further in time than you absolutely have to, and you may have to consider improving strikes a bit more incrementally than you'd like. I mean, who wants to roll out a year to get their calls clear of current price? (Extreme example, but you get the idea).
Good Return on Risk trade on IYR (Debit spread)With a low Implied volatility rank of 15 in the real estate ETF I decided to make a directional bet with a debit put spread. This is a low probability trade, but will add some negative deltas to my portfolio. It does have a decent R:R of almost 2:1 so at least I will get paid when I am right and my risk is defined.
Bought a Vertical debit put spread on IYR for $1.01 per contract.
I did 5 contracts so the trade would look like this:
(+5) 79 Put
(-5) 76 Put
Max win $995
Max loss -$505
Probability of profit is 45%
IYR Super BullWith the market running, I thought I would continue to add long delta on an ETF that is possibly catching up. This isn't a normal setup that I would do, but it still takes on one of the principles of premium selling, which is reducing cost basis.
Trade Setup:
+1 IYR Apr 21 76P/79P/81C Super Bull @ $0.01
DTE: 50
Max Win: Theoretically Undefined
Max Loss: $301
Breakeven: $81.01
Trade Management: The trade acts very interesting, as it will not make any money at expiration unless it is over $81.01. In the mean time, however, any expansion in volatility would help out my call (hinder the short put spread and possibly show a paper loss); and obviously a continued up move would benefit both sides of this trade. The only way for this trade to "lose" would be to trade and expire down below $79. My loss would be the difference between $79 minus closing price at expiration, down to $76. $79 - closing price = loss. I am going to monitor the trade closely, as it's fairly new and I'm trying to adapt to an up moving market, so my initial target for the spread is $200.
Green zone is profit potential; Vertical black bar is expiration.