New Trade: We're Shorting KRE, the Regional Bank ETF, on a Double-Top Breakout Reversal
Due to rising interest rates and property loans going bad, commercial real estate (CRE) is a ticking time bomb that could produce more than a trillion dollars in losses for the banks.
Wall Street has ignored the issue because CRE problems mostly stayed hidden beneath the surface, concealed by "extend and pretend" actions (efforts to make everything look fine).
Not anymore, though. Yesterday another regional bank saw its share price fall 38% in a day — because of CRE losses — and a large Japanese bank also saw its share price tank 20% on surprise losses in its U.S. commercial real estate portfolio.
This is a big, big problem. As in, literally, a trillion-plus dollars.
Today we are shorting the SPDR Regional Bank ETF (KRE). Here are the details, with charts to follow and further commentary later this afternoon:
Shorting the SPDR Regional Bank ETF (KRE)
Shorting at 46.06 or better (higher is better when shorting)
Risk point: 52.16
Position size: 18.18%
KRE, the bellwether regional bank ETF, took a nosedive yesterday on the news just mentioned (which we'll cover in detail this afternoon). KRE has now double topped and reversed the recent breakout.
And here is a closer look at the KRE reversal in relation to the 50-day and 200-day moving averages.
More to come this afternoon.
Until next time,
Justice Clark Litle Chief Research Officer, TradeSmith
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
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