Canada’s Bust is Coming

If you’ve been a subscriber to Boom & Bust since the start of 2012, you likely already know that the Canadian real estate market is a ticking time bomb.

I recommended betting against the country’s economy – via a short sell in the iShares Canada ETF (NYSE: EWC) – in our February 2012 issue. And while the position hasn’t accrued big profits just yet, this chart shows the potential gains you could grab in the event of a Canadian real estate collapse.

We think it’s a matter of “when,” not “if.”

See larger image

A few things to note…

First, the white crosshairs mark our Boom & Bust model portfolio entry at $29.10 per share on February 28, 2012. Since then, the share price has clearly not collapsed. Yet, it hasn’t shown any strength either. While the S&P 500 is up more than 18% this year, EWC is down about 1% after being underwater by 8% in June.

Looking ahead, I’m watching the $25 level closely. This price marks the neckline of the familiar head and shoulders pattern (green circles are shoulders; blue circle is the head).

Technical analysis says when this level is broken to the downside, the odds of a significant decline are very high. And, you can expect a drop, in this instance, of about $15 per share. That drop would put shares of EWC around $10.

Yet even a fall to just $14 per share – the March 2009 low – would offer profit potential of roughly 50%!

One thing is for certain: For every boom… there’s a bust!

Canada’s bust is coming.

How Will Trump Restore the Dream of the Golden Years?

President Trump has come into office with a tall order at hand to restore faith in our ability to retire on time… or at least come close. But the numbers aren’t in his favor… or ours.

Our new infographic, How Will Trump Restore the Dream of the Golden Years?, dives deep into U.S. retirement figures, to analyze a scary trend in the U.S. and gain perspective on the future of the retirement landscape.

Categories: Housing Market

About Author

Adam O’Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with the minimum risk. Adam has worked as a Prop Trader for a spot Forex firm. While there, he learned the fundamentals of trading in the world’s largest market. He excelled at trading the volatile currency markets by seeking out low-risk entry points for trades with high profit potential. An MBA graduate and Affiliate Member of the Market Technicians Association, Adam is a lifelong student of the markets. He is editor of our hugely successful trading service, Cycle 9 Alert.