December 11, 2017
Mish's Daily
By Mish Schneider
While away at a business conference, we went to dinner and sat by an enormous saltwater fish tank.
As I chased this clown fish around to get some photos, I realized how readily he seemed to adapt to his natural yet artificial habitat.
That got me thinking about real estate and particularly the real estate Exchange Traded Fund, IYR.
The Modern Family-the Russell 2000, Brick and Mortar Retail, Biotechnology, Semiconductors, Regional Banks, and Transportation must have a domicile, right?
I picture their house styled in a typical American architectural style.
Yet, recently, I began to wonder-
How does the Modern Family’s home reflect the recent rotation from tech into retail and transportation?
An article appeared in the Wall Street Journal on how Warehouse space in industrial buildings that online shopping sites use to store inventory has driven rents way higher.
The rental market is not always the best indicator of the commercial and domestic real estate buyers’ market. Nevertheless, I decided to take a look.
IYR includes real estate holdings and real estate investment trusts.
The top 3 holdings are American Tower Corp (AMT), Simon Property Group (SPG), and Crown Castle International Corp. (CCI).
The entire IYR basket holds 125 stocks.
15% of the holdings are listed in the small cap indices. 100% of the portfolio exposure is in the United States.
That makes IYR a perfect habitat to watch how the Modern Family performs in comparison.
Currently, IYR pales.
On the weekly and monthly charts, IYR has major support down to 79.25. On the daily chart, 80.00 appears as another key pivotal number to hold.
A channel that goes back months, shows that a move over 83 can be explosive.
That number also matches the recent high.
Through 83, there is not much resistance until 85. The all-time high goes back to 2007 at 95.00.
If the Modern Family truly believes that 2018 brings greater economic prosperity, then is should stand to reason that IYR will reflect that optimism.
After all, after living in a crowded house for the last 10 years, the Modern Family is anxious to upgrade.
However, frugal Granny Retail (XRT) will monitor her husband (Russell 2000) and her children, particularly Transportation, carefully.
A clown fish looks for the safety of anemones to hide from their predators, most of whom find those same anemones toxic.
For now, IYR is the anemone. We will watch for how symbiotic the Family ultimately considers the anemone’s compelling grasp.
Next Daily out Wednesday as we travel back home on Tuesday.
S&P 500 (SPY) 265 now pivotal
Russell 2000 (IWM) 150.00 now pivotal with 152 near-term resistance to clear. Until it takes out recent highs, it’s still working off a reversal topping pattern
Dow (DIA) 242 the 10-DMA with this confirmed reversal pattern. Through 244 better
Nasdaq (QQQ) 156.69 to clear and 154 then 151.50 places to hold
KRE (Regional Banks) 57 key support
SMH (Semiconductors) 96.50-100 range for now
IYT (Transportation) Still working off a reversal topping pattern until it takes out the highs. 187.40 pivotal and 183.50 support
IBB (Biotechnology) 105-107.50 new range to break up or down
XRT (Retail) 44.05 the support to hold
GLD (Gold Trust) 117.95 the 200-week moving average-an institutional investor’s line in the sand
USO (US Oil Fund) Now over 11.50 good with 12.00 next hurdle.
TLT (iShares 20+ Year Treasuries) Reversal with 125.25 the 50 DMA
UUP (Dollar Bull) 24.43 200-week MA resistance
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