The Last Shakeout – IYR

IYR and the reits were strong all day.

IYR is attempting a breakout of trendline resistance.

The weekly chart of IYR shows resistance at the last pivot high of 46, and prior support/now resistance at 52.

I held the ETF over because of the strong close, but I’m reminding myself to watch for the last shakeout on stocks that have been strong most of the day.  In this case, I’m bullish on the market, and expecting SPX 1100 soon.  We’re at 1090 now, and the trend is still up, so I figure I can hold for a gap higher in the morning in IYR.

At point 1 on IYR when it formed the decent red candle, and couldn’t continue up on the next candle, it was a warning sign.  The next few candles couldn’t get any higher either (point 2), and eventually that first pivot low under 42.35 gave way.  Now if I were to have a stop in on the next pivot low of 42.23, I’d get shaken out on that; only to watch it immediately move .50 higher.  I’ve got to watch these closely when two pivots are taken out, yet I believe the equity will still close strong.  Volume started coming in on the reversal back up, which helped make the decision to stay in.