Like a moist vanilla cake with milk chocolate icing, cheap real estate can be awfully hard to resist.
And among the more tempting indulgences for investors is the iShares Dow Jones US Real Estate ETF, or IYR for short. The IYR has had a nice run this year, up 12.9%, but in the last two weeks this REIT ETF has been slammed.
Made up of a assorted real estate related companies such as Simon Properties, Public Storage, Equity Residential and many more, the pullback may seem like the perfect time to indulge your real estate hankering and establish a position.
After all, recent housing data as well as manufacturing data has been improving and that should bode well for almost all areas of real estate.
However, Jim Cramer isn’t so sure.
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With the assistance of Tim Collins, a colleague of Cramer’s at RealMoney.com, the Mad Money host checks the technicals. And he finds plenty to worry about.
Looking at the daily chart, “The IYR broke down through an important level of support at $65.50,” explained Cramer. $66.50 had been a level of resistance in the past and should have generated support – but it didn’t – a bearish sign.
“Even worse, after the IYR broke down below $65.50, it failed to recapture that level. For three days in a row it tried, but it never succeeded; that suggests $65.50 may again become resistance.”
It gets worse.