Tuesday, January 20, 2009

Sector Participation

We mentioned in the previous post  that today we saw sector participation and outsized moves.  Trading RM has been discussing and trading the fact that the XLF (and to some extent the IYR) are leading the move down.   Trading RM makes use of our blog, our morning worksheets (available by registering at www.tradingrm.com), and our daily trading to identify and trade these trends. 

Below Trading RM will highlight one setup from Tuesday January 20th which was a good entry point to play the REIT sector. 

Between 2:15pm cst and 2:33pm cst we saw the following price action:

  • SPX:  806 ->815

  • IYR:   30.78 ->30.90

  • SPG: 42.55 ->42.43

In other words the REIT sector remained weak/sideways relative to the market move up.  Whent he market rolled the REITS were already making new lows and ended up closing on their lows.  (Pick a name and the chart looks similar: VNO, BXP, SPG, etc...)