Looking For A Quick Buck With A Bearish Real Estate ETF
For well over a year, it seems followers of the financial sector have been saying commercial real estate was going to be the proverbial "next shoe to drop." It is debatable as to whether that shoe actually dropped, but we do know that REITs were fertile ground for dividend cuts in 2009 and the sector was certainly beaten up along with banks, brokers, etc. in 2008.
Whether it is some M&A news, plans for IPOs or some cautious optimism from economic data reports, commercial real estate has gotten a lift and that has been bad news for the UltraShort Real Estate ProShares ETF (NYSE: SRS).
Take a look at the chart of SRS and you'll probably agree that things are pretty ugly as the ETF is trading well below its 50 and 200-day moving averages. Frankly, the ETF has been in a death spiral of sorts.
That doesn't mean there isn't opportunity here. This is not a bearish proclamation on REITs or commerial real estate at large, but if support at $7 holds for SRS, the bearish ETF could bounce back to $8.40-$8.50. Give this trade a try with a stop at $6.90, meaning your risking 30 cents or so to possibly make more than four times that amount.
