SRS-UltraShort Real Estate

If you are a long time member then you know SRS is and has been one of my favorite short plays, however, it has been a long time in the making and it has been curious why it hasn't taken off yet.

 This is one trade we have had to be REALLY patient with, however, even if you take this smaller version of the bullish descending wedge (there is a much larger version), the rough upside target is well over a double conservatively, if you take the bigger picture in to account, then SRS could be an easy 1000% gain. Note the bottom that has been forming for well over a year, making this a bottom that could support a huge move. Note the rounding volume, suggesting that this is ready to move from stage 1 accumulation to stage 2 markup, in fact, that may be starting already.

 A closer look at recent price volatility and volume.

And the amazing 3C daily chart in a huge leading positive divergence.

And the catalyst? What may make SRS a long candidate now?

The recent collapse in the PrimeX market is the answer. This may also be why SRS has based so long as PrimeX's 4 indices haven't crossed below $100 (par) pretty much since their creation, meaning the Prime Mortgage Baked Securities-not to be confused with the junk subprime which collapsed in 2007- including Fixed 1&2 and ARM 1&2 have crossed below par over the last few weeks as European banks and others have liquidated holdings in PrimeX. This is a new and rapid decline for prime loans and may offer the opportunity of a lifetime or at least one of the biggest opportunities since the sub-prime collapse.

I encourage you to look at SRS as a trading vehicle and to consider buying on the recent weakness. I have believed in this trade for over a year, it's just been a matter of a low risk/high probability entry and with PrimeX now collapsing and falling further each day (Prime Commercial Backed Mortgage Securities are yet to see the same decline), SRS may finally be offering an opportunity that may just be to good to pass up.