SRS Ultashort Real Estate Daily Chart Oversold Positive Divergence

SRS is a double inverse against the real estate sector. Thus, as traders jumped on board the housing recovery over the last year SRS received regular beatings, falling lower and lower over time. We saw the July and September bounces coming due to the positive divergence. Note how the July-September period shows positive divergence with the MACD and stochastics, which caused the bounce, but the RSI and money flow were weak and bleak wanting to see lower lows. Price has now come back down to satisfy those two Gloomy Gus's. Now, with price at a lower low, universal positive divergence exists across all indicators (green lines).  Price may jog across this area a bit but a move upper should be on tap now. Keystone opened up a long trade on SRS over the last couple days.

The inverted H&S pattern shown by the red lines was described as it unfolded this year. Note the textbook pattern, head at 23.5, neck at 26, that is a difference of 2.5, thus 26+2.5 = 28.5 target if the neck line is broken.  Price moved up thru 26 and bingo, tagged 28.5 fulfilling the pattern, then promptly collapsing. SRS is particularly interesting in light of the Housing Starts data only a couple hours away today. Keystone lays his head on the stump this morning and Starts will determine SRS's fate.  Projection is for a bounce in SRS, and basing across this area, and then a sideways to sideways up bias moving forward. The weekly chart is positively diverged as well. Of course this means the housing recovery is stalling. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

Note Added 1/17/13 at 9:40 AM:  Housing Starts blow-out to the upside at 945K, highest since July 2008.  This reinforces the housing recovery talk and causes SRS to move lower at the opening bell.