Short real estate ETFI’m going to jump back in on shares for the short real estate $SRS and $REK, a few week-month swing trade
REK trade ideas
$REK Volume & Upside Potential As the economic outlook degrades in the face of persistent and widespread inflation and GDP projection revision for Q1 was worse than expected, real estate will take a hit. Currently seeing record prices while the beginning of rate hikes and slowing sales appears.
A short opportunity exists and is currently reflected in a massive volume uptick in anticipation of a significant market correction appears imminent in the Dow Jones Real Estate Index.
Near-term ~20% to 25% price target with a substantive longer-term potential quite a bit higher if the macroenvironment doesn't turn around and the economic headwinds don't soften.
This is an inverse short play, so market retraction provides impetus to long $REK.
More pain with carry cost - No short propertyIn a growing market with or without inflation property is long...so dont be short!
Cost of carry on a short ETF is a sure way of losing money.
Cost of carry..negative exponential..and back down with the cost of carry from the shorts creating negative exponential returns.
HODL is not appropriate for these types of ETFs.
Cost of carry is a killer!You dont want to caught long with a vost of carry or roll premium against you!
No investment here.
Your timing spikes...
Being short is not a short cut to wealth..so be aware of the risks and understand the product you are trading!
Could Real Estate be the next "Shoe" to drop?AMEX:REK Though it may be a little early to tell, we might just might see a buyer's market emerging in real estate in the next few months to come.
Although, not a popular ETF, this short ProShares ETF seeks a return that is -1x of the Dow Jones U.S. Real Estate Index. I know it's probably not most pleasing though to think the real estate market could go down, but it is possible that the recent 3 million Americans unemployed due to the Coronavirus could be one of the first signs of an economic slowdown. Historically, if you look at how monetary policy plays a role into the economy, lowering the Fed Funds rate helps loosen credit so that banks and business pay less interest. However, this in turn often affects fixed income and mortgage rates.
After the 2008 Financial crisis, the Federal reserve initiated QE, short for quantitative easing, which can be thought of as an injection of money into the heart of our financial system... or as like to say "printing money." We have seen a similar action taken by the Federal Reserve recently. Under "normal" conditions real estate prices move opposite of mortgage rates. You either spend more money for a house or commercial property and pay a lower interest rate, or you wait for real estate prices to fall, but enter a mortgage with a bit of a higher interest rate.
In this situation, we have unemployment on the rise in the U.S. and globally. Businesses around the world are closing... some of which may be permanent, people are not spending money, and may fall in debt. In some states, such as California, major banks have a 90 day waiver on residential mortgage payments to provide time for people to get back to work. However, it is uncertain if many of the unemployed population will have a job to return to in order to meet their obligations to the bank.
Throughout the bull market, shares of REK have been steadily declining as interest rates have been near 0 for most of that time, allowing the economy to strengthen. However, since the initial drop on Feb 28th, 2020, REK has increased by 50% and the average volume has since increased 10-fold. On a daily basis, the average volume of shares traded has been ~24,000 range. In recent days that number has increase to ~240,000.
What are your thoughts? Where do you see Real Estate heading in the next few months to come?
REK - SHORT REAL ESTATE - MODEL SAYS OPT. BUY = EO MAY 2019Optimal Buy Point is forecasted to be end of May 2019
Real estate reversal pattern seems to be forming $REKAMEX:REK
Sell price target at $18.40 based off of a 38.2% Fibonacci retracement
