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August 29, 2005
REITs follow Finance
On 25-Aug, I showed a chart of the Regional Bank HOLDRS (RKH) breaking down. This is obviously an interest sensitive group and so are REITs. The iShares REIT ETF (IYR) gapped down and fell sharply in early August. This move created an oversold situation that needed to be alleviated. This can be done with a flat consolidation or a bounce. IYR got a little of both and formed a pennant over the last 2-3 weeks. These are continuation patterns and a move below 63 would signal a continuation lower.
RKH broke below the lower trendline of a rising wedge and then consolidated (gray oval). Notice that broken support turned into resistance around 137 and this is the level to beat. A doji formed on Monday and the decline over the last two days solidifies resistance. There is support around 133, but I am not expecting it to hold.
Posted by Arthur B. Hill at August 29, 2005 07:22 AM