As one can see in this slow motion image of a bursting bubble, once a bubble is pricked, the ensuing reaction is very quick. Had the Fed not keep the accelerator pinned to the floor for so long, the bubble would not have grown so large and as such, the mean reversion (which has likely only just begun) would not be so extreme.
On this updated daily chart of IYR (DJ US REIT Index ETF), we can see that 4 1/2 months of steady gains have been completely wiped out in just three weeks. This is what happens when you get a rush for the exits. For anyone short the sector or any individual REITs, note that we did hit the second support zone shown on the previous IYR (labeled as such in the updated chart below). Therefore, a reaction from at or near current levels is possible this week although we are now at the point in the broad markets where I’d expect the selling to begin to accelerate so my guess is that any bounce or consolidation will be short-lived.
