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.
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.
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