Tuesday, February 28, 2006

Shorting IYR

I'm still organizing my thoughts on new chapters in my "asset allocation basics" series. In the meantime, if you recall that I deliberately choose not to include REITs in my asset allocation plan since there was a high probability they would be swept away in this deflating housing bubble. Well, I put on a small short position in IYR (iShares real estate ETF, 100 sh @ $70.05) today as it moved back from the top of the Bollinger band. Stochasitcs and MACD (impending crossover and negative divergence) both indicate some downside to come. My stop loss is the recent high at $71.10.

I’m a relative newbie in shorting. I actually lost money shorting TOL and BZH earlier this year (imagine that!), as I was caught up in a short squeeze and was forced to cover. I further missed the opportunity to go back in as the negative divergences indicated. Well, let’s see if I’m more successful this time.