Opportunity in REIT’s approaching – but not a sector for the timid

stock stress

REIT’s can be a choppy sector to own. Since 2003, the sector has been hit hard on a few occasions. XRE declined about 20% both in 2004 and 2013, and was cut in half between  2007 – 2009. Buy & hold may have worked over the long term for investors in REIT’s, but you had to survive the numerous rallies and crashes along the way. Personally, I would have experienced heart failure on at least one of these occasions, had I been a buy/hold investor on this sector. I’m not inclined to grin and bear it through that type of stress.

xre

 

Having noted the volatility within the REIT sector, a technically driven trader should not ignore the opportunity that this volatility presents. Currently, XRE is pulling back to a significant level of past resistance (new support) on the chart. A successful test of the $16.25 – $16.50 zone may suggest an eventual return to, and possible breakout from the recent resistance point of around $17.50. Watch for positive confirmation by the currently falling momentum oscillators before acting.

XRE nearterm

At ValueTrend, we do not currently hold XRE or any individual REIT’s. However, we are considering a position in either the ETF or one of a few individual securities in the sector. We’re waiting for a successful test of the support level noted above, with momentum oscillator confirmation. Seasonality for the Canadian REIT sector becomes positive over the spring and summer. EquityClock has the seasonal chart here: Equity Clock » Canadian REIT (TSE:REF.UN) Seasonal Chart

 

Keith’s BNN appearance from last week

Here is the clip from my Top Picks on BNN: Three top picks from ValueTrend’s Keith Richards

 

 

4 Comments

  • I use FreeStockCharts.com and TD WebBroker. I’m confused. Your chart above shows XRE at about $16.50 on May 3,2013, but, both of the other two websites that I mentioned show it at $17.85 on May 3,2013.

    Needless to say it does not leave a good feeling if the websites that I’ve been using are inaccurate.

    I read your blogs and books vorasiously. Keep it coming.

    Reply
    • stockcharts.com tends to add dividends to their historic stock prices, making things confusing. Freestockcharts may be a better source for accurate historic priceing – it all works out in the end as far as the patterns go, but historic prices change due to (IMO) the rather silly policy by stockcharts of adding back dividends.
      Having said that, stockcharts.com reproduces better looking charts for the blog–so I use their charts for this site.
      Lesson learned: be careful with high dividend stocks when viewing prices on stockcharts.com

      Reply
  • hi keith, mentioning dividends here reminds me that CPD (preferred shares ETF) and others like it have fallen off in the last month. any decisive factors at play here? seems like interest rates have been only talk. any cautions to moving in on this drop?

    Reply

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