Cramer Says "Buy The REITS"

Title of this post is a little disingenuous as I don't plan on discussing, confirming, or refuting any of Jim Cramer's recent comments regarding the REIT sector as long. Longtime readers can probably guess my gut feeling on this. Thankfully this post is not about my gut.

What we are going to look at is the long term and short term technical outlook for the REIT index and see if it warrants initiating any position - long or short.

Here is the long term (10 year chart) for the REITS index:

The long term trend is down. The index hit the low 20s in March and since rallied more than 100%. I expect it to rally all the way to the yellow spot which would put it somewhere near its long term trend line as well as a complete 50% retracement of the down move over the last few years.

So on the long term chart it looks like an eventual short - but not yet - the timing isn't there.

The next question is the short term chart and if there is a nice long or short setup. (suspicion - there might be a long as the index retraces to the anticipated FIB target and trendline).

The daily chart shown over the past six months looks quite bullish other than the declining volume during the recent months. I would be looking long over the short term however there is a problem in that the ETF looks really overextended her and I would prefer to get long near the trendline with a bit tighter stop if the trend resumes.

So back to Cramer - I think he's right for now but this fundamental concept - of short or long the REITS based on the economy is really difficult to trade off of and I don't see either opportunity as correctly presenting itself in the now moment. Ill keep an eye on this one but maybe I can find a present trade in thet coming week.