The REIT Stuff

There has been noticeable weakness in many of the real estate investment trust stocks over the last few weeks. This can be seen in the Vanguard REIT Index ETF (VNQ) daily chart, but it has been able to hold and consolidate above key support. Price dropped below the 50-day moving average at the end of last month, and then began trading just above a three-month level of support in its lower Bollinger Band range. While the price action looks relatively weak, its ability to hold the support level has allowed stochastics to bounce out of an oversold condition in bullish divergence to price and for the moving average convergence/divergence indicator to flatten out. But while the trend and momentum indications are positive, the volume and money flow readings are negative. Overall volume has been well under the 50-day moving average of volume and Chaikin Money Flow reflects distribution.

Vanguard REIT Index ETF (VNQ) Source: StockCharts.com View Chart » View in New Window »

The chart of the DCT Industrial Trust (DCT) has similar technical characteristics. Additionally, price has been trending higher, while gently reverting around its 50-day moving average. A clear uptrend line has formed along that average over the last three months and its support is currently being reinforced by a former horizontal resistance, turned support, line. This level defined the top end of a triangle pattern that formed in July and August. Over the last month, a second triangle pattern has formed with a downtrend line drawn off the September/October highs. The current distribution seen on this chart looks similar to the distribution pattern during the previous triangle consolidation phase and is likely to improve with any positive price action, and the pullback in September seems a logical consequence of reversion and fulfilling the measured target move of the larger triangle pattern....58 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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