I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Wednesday, January 6, 2010

An Analysis Request: IYR

My last post (Financially My Dear I Don't Give a XLF which I also posted on my Caps blog: http://caps.fool.com/Blogs/ViewPost.aspx?bpid=322104) generated the same request from two different people (streetflame on Caps, and Gumbo on MTaA): To do an analysis of IYR.

First up, the long term chart. Read the notes in Green and Orange. From this view, the case can be made for a continued rally. But I think the evidence points more strongly to Primary Wave 2 (bullish correction) being complete.

Next is the count off the bottom. The IYR count is very corrective in nature. There are impulses where you expect C legs and in some of the A's. But overall it is a very corrective move. Also, per streetflame's request, I am showing the performance of KIE, KBE, and KCE. None are looking particularly strong at the moment. Insurance is holding up the best. And per my last post on finanicials, I think the are showing the most intermediate term weakness.

Here is a count since November. Based on this, I can count a pretty clean double three. Based on this, Primary 2 for IYR looks like it is done

Here is my micro count since the peak. I can count an impulse down and 2 looks like it is shaping up to be a deep retrace expanded flat (2's are usually zigzags, but they are more often deep retraces. Since this flat looks like it will be a deep retrace, having a flat in this position doesn't bother me)

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