Skip to main content

Thursday's Market Action: Rates rise, stocks don't

My two favorite bearish plays have had a good run the last few days. The ProShares UltraShort QQQ (QID) and the ProShares UltraShort Real Estate (SRS) ETFs have been the only glimmer of pleasure in the portfolio lately.

I posted over the weekend that I was struggling with the idea of hanging onto QID in the face of the latest set of new highs on the major averages. I am glad that I did. The precipitous drop in the NASDAQ bears out my fears that the current rally was over-extended. The rise in interest rates and the realization that a market supported by liquidity was vulnerable to rate increases took its toll the last few days. With QQQQ well below its 20-day moving average and close to its 50-day, the chart is looking weak.

As for SRS, it more or less tracks the iShares Dow Jones Real Estate Index (IYR). And, boy, does the IYR chart look bad! Rising rates are a killer for real estate, even REITs, and IYR is certainly taking it on the chin. Having fallen below a trend line a few weeks ago, it had recently rallied based on the buyout of the Archstone-Smith REIT by Tishman Speyer Properties and Lehman Brothers for $22.2 billion. The rally lost steam as it rose to meet the resistance level represented by the previously broken trend line. With the recent interest rate situation, IYR has dived back down. And SRS was up over $5 today.

I wouldn't be surprised to see a bit of a dead cat bounce in QQQQ and IYR Friday. But it seems market sentiment has shifted and now the glass is half full.
Labels:

Comments

Post a Comment

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation
4 comments
Read more

Thursday Bounce: Trend Busters, Swing Signals and Trend Leaders for July 9, 2009

This is a quick post to announce that we have published Thursday's Trend Leaders, Swing Signals and Trend Busters at Alert HQ . All are based on daily data. Today we have the following: 72 Swing Signals -- A couple of days ago we had 35 signals, today we have twice as many. Happily, we now have 65 BUY signals, a mere 4 SELL Signals plus 3 Strong BUYs. Whoo-hoo! 56 Trend Leaders , all in strong up-trends according to Aroon, MACD and DMI. There are 18 new stocks that made today's list and 60 that fell off Tuesday's list. 48 Trend Busters of which 5 are BUY signals and 43 are SELL signals The view from Alert HQ -- Talk about mixed signals. If you look at our Swing Signals list you would think the market was in the middle of a big bounce. BUY signals are swamping the SELL signals and we even have a few Strong BUYs. Yes, there's a good sprinkling of tech stocks and tech ETFs but the distribution is pretty broad-based with a good number of different sectors represented, eve
1 comment
Read more

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position. This first post in the series starts at the beginning: getting good investment ideas. Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets. As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professional
4 comments
Read more