Editor's Note: We are expecting the real estate sector to take a breather and SRS is a good candidate to take full advantage of any meaningful pullback.


Powershares UltraShort Real Estate - SRS - close: 5.72 change: +/-0.00 stop: 5.63

Company Description:
ProShares UltraShort Real Estate (the Fund) seeks daily investment results that correspond to twice the inverse daily performance of the Dow Jones U.S. Real Estate Index (the Index). The Index measures the performance of the real estate sector of the United States equity market. Component companies include those that invest directly or indirectly through development, management or ownership of shopping malls, apartment buildings and housing developments, and real estate investment trusts (REITs) that invest in apartments, office and retail properties. The Fund takes positions in securities and/or financial instruments that, in combination, should have similar daily return characteristics as –200% of the daily return of the Index.(source: company press release or website)

Why We Like It:
Real Estate stocks have had a monster rally off of their February lows and we believe a pull back is overdue. SRS appears to be breaking its downtrend line which began on February 10. If a pullback in RE stocks gains steam SRS will benefit. I am suggesting we initiate positions if SRS trades to $6.10 which is above 20-day SMA in the coming days. Use a trigger to open long positions in SRS (which is a bearish play on RE stocks) at $6.10. Our first target is $6.85 which is just below prior support from December. Our second target is $7.15 which is just below the low on January 19 and I anticipate SRS reaching this level if there is overall weakness in the market. This is an aggressive play so please use smaller position size to limit risk. If triggered let’s place our stop at $5.65 which just below the recent swing low on March 25. Our time frame is about two to three weeks. *NOTE: Although this is listed as a long position in our portfolio, this is a bearish position on real estate stocks*

Trigger to open long positions at $6.10

Suggested Position: Buy SRS if it trades to $6.10, Stop Loss $5.65 (unopened)

Annotated chart:

Entry on (unopened)
Earnings Date Not Applicable
Average Daily Volume: 11.0 million
Listed on April 8, 2010