How to Play the Housing Market

Ed Ponsi

I'd like to introduce guest contributor Ron Lembo to Ponsi Charts. Ron is the manger of Sonoran Vista Group, LLC in Scottsdale, AZ. 

Prior to the Covid-19 pandemic, there were concerns about an overheating real estate market. In some areas, notably in Florida and California, housing prices had climbed well above levels seen during the 2007 bubble. 

Traders who want exposure to the housing market have a variety of instruments at their disposal. One such instrument is the iShares U.S. Real Estate ETF (symbol IYR). 

This ETF tracks a broad range of US real estate products, and is considered a benchmark when measuring the strength of U.S. real estate.

Despite the pandemic, there are few outward signs of volatility in the current housing environment. However, IYR's chart could be telling a different story. 

IYR

On the monthly chart (right), let's focus on IYR's 12-month moving average. The ETF is struggling to climb above that indicator. 

The weekly chart (center) reveals that IYR is currently range-bound, trapped between $73 and $87.

On the daily chart (left), we find our entry in the area between $71.93 and $73.17. 

When the price fired out of that area in May, it left behind a gap. In order for that gap to be filled, the price will need to fall to our buying area. 

You can reach Ron Lembo at Rlembo65@gmail.com

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