A post I made earlier this evening mentioned real estate and showed the IYR, a real estate ETF that's still doing okay so far. But my overall view of housing and real estate is bearish, candidly. I've got to agree with the views of Martin Armstrong in his late November newsletter. Namely, it's got a long way down still to go. Armstrong actually forecasts an interim low in the year 2012, then up into 2016, then down again until something like 2030 or 2033 (I don't recall the year). What about Tony Caldaro's Objective Elliott Wave? I've borrowed from his public charts (thanks again Tony!), for the housing index. Tony's marking on those charts, below, shows that the housing index took about 3 years to drop in wave ABC (normally completing a "W" in regular Elliott Wave). Tony marked an X on its recent high. That implies the housing index is downtrending in its next big wave down.
Obviously it can have subwaves up and down meantime. Also, it's one thing to say that teal estate and home values ate dropping, and another to chart an index of homebuilder company stock values, which may travel differently. But my basic point is this: The real estate industry and land/home values should act as a drag on the economy for a long time still. The recent nice bounce helped, no doubt. But having this sector roll over again should be considered for trading this sector defensively, as well as kept in mind for the undertow it can create for banking in particular and equities in general.
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