I saw IYR mentioned on CNBC Fast Money or Options Action a few days ago. It looked too strong to short, but I set an alert if it fell below recent lows. It triggered today 4/16/2019.
Yesterday it made a Dark Cloud candlestick pattern on high stochastics. Today, on decent volume, it broke through the trend line, plus a parallel trend line off the 3/20/2019 low. Also, the ADX crossed to the downside, which is not a very reliable indicator, but it adds evidence we're going bearish.
Normally I'd wait until near the end of trading to make sure the move hasn't reversed, but it looks like a strong enough move, I'm going to add a little risk and get in mid-day. If it reverses above the 8 ema at the close I can get back out and wait until tomorrow.
I set the target to the 50% Fib but I was worried about the 200 dma being just above it, which might act as support and end the down leg. So I checked how IYR respected the 200dma in the past. Here's a wider few.
Notice how IYR sliced right through the 50 dma and 200 dma between Oct 2018 - Feb 2019. Seeing this gave me confidence to set the target at the 50% Fib rather than the more conservative 200 dma.
My stop loss is just above the recent highs at 88.25.
I got some Jun 85 Puts for $1.42 at 11:36am EDT.
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