REIT’s to the Rescue? Well a Few

• Posted by Greg Harmon
• on May 4th, 2011

With the broad market taking a three day plunge many REIT’s are following suit showing the Three Black Crows pattern (related below). This bearish continuation pattern does not bode well for many in the sector. But it is precisely when most of a sector is heading lower that you can discern strength from weakness within it. Three REIT’s, American Capital Agency Corp (ticker:$AGNC), Annaly Capital Management (ticker:$NLY) and SL Green Realty Corp (ticker:$SLG) are bucking this trend. Let’s take a look.

American Capital Agency Corp, AGNC

AGNC has been in a rising trend since mid April. It is now testing resistance at top where it gapped lower after March 21. As it approaches the Relative Strength Index (RSI) is rising, the Moving Average Convergence Divergence (MACD) indicator is increasing and the Bollinger bands are expanding as it hits the top. With rising Simple Moving Averages (SMA) this REIT looks set up to break though and move above 29.50. Add in the 19% dividend and you might be tempted to not even look at the chart.

Annaly Capital Management, NLY

NLY has been in a rising trend since September. Recently after basing near the 50 day SMA at 17.25 it is rising again with a rising RSI, increasing MACD and expanding Bollinger bands. A move over 18 would set a target on a Measured Move to 18.60. This also has a fat dividend while you wait at 13.8%.

SL Green Realty Corp, SLG

SLG has seen the same rising trend since September as NLY. It gapped higher after earnings on Friday and has held that gap up despite the market downturn. The RSI is technically overbought and working that off so it may pullback and fill the gap. Use the gap fill as a stop. The SMA’s are rising on SLG but not as steeply and the MACD is also declining. Not the best of the bunch and only has a 0.49% dividend, but still showing relative strength in the sector. Keep an eye on this one for a move higher but AGNC and NLY look good to go. In fact I think I may buy some right now.

“Bad News Has Wings” – Like Elephant Dung

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