SRS Update

A few days ago I said I liked SRS long (ETF which is a leveraged inverse/short real estate).

The white box shows the pullback I considered a buy a couple of days ago.

 Here is the daily 3C positive divergences/accumulation in SRS

Also the long term pattern is a bullish falling wedge with an upside target of $32-volume is correct for the formation as well. Wedges have been pretty successful patterns lately, in part because they tend to be so large and see less daily manipulation or in other words, the patterns may see some volatility, but they rarely fail.

 Here the Trend Channel kept a short position open through most of the fall from the $31 area to about $21, there wasn't even a single false stop out. Right now the Trend Channel which will lock in gains on a daily basis as the trade moves up, is showing a current daily stop out of $18.70-this is not intraday price action but on the close.

Right now we have a breakout from a smaller triangle, but if successful, SRS should breakout of its recent resistance around $20.04.

A longer term trade can use the Trend Channel with approximately $1.25 in risk per share or a shorter term trade can use the triangle to stop out around $19.50 for about $.43 risk per share. 

A 200 share position in the second trade would see a loss of about $86 if the trade failed with potential upside of $2400. The longer trend trade which would have a higher probability of not being stopped out, would have about $250 in risk with the same potential target of $2400-in either case, the risk reward ratio here is very high. It's a trade worthy of consideration.