A few days ago, I highlighted short-term weakness in homebuilding stocks (“3 Homebuilder Stocks for Short Term Traders”). Today, we’ll look at similar weakness in exchange-traded funds representing the real estate management and REIT sector.
The iShares Cohen & Steers Realty Majors Index Fund ETF (NYSE: ICF) pulled back by well over one and a half percent on Tuesday, closing at new, two-week lows back inside of technically oversold territory. ICF has a modest, short-term edge of half a percent, along with a “consider buying” rating of 9 out of 10 earned midway through Tuesday’s session.
ICF climbed back into bull market territory in early January, and the current selling in the fund represents the first significant pullback in the ETF since it rallied back above the 200-day moving average.
Down two sessions in a row and four out of the last five is the Dow Jones REIT SPDR ETF (NYSE: RWR). Like ICF, shares of RWR developed “consider buying” ratings of 9 out of 10 intraday on Tuesday, and are trading at new, short-term lows. RWR has a short-term edge of over half a percent after returning to oversold territory above the 200-day moving average.
The Vanguard REIT ETF (NYSE: VNQ) returned to bull market territory in late December 2012, and after soaring through the month of January reached new 52-week highs in the first few trading days of February. Profit-taking since those highs as resulted in the VNQ closing oversold at least five times in the past few weeks including Tuesday’s close in oversold territory and VNQ off by well over 1%.
VNQ had actually traded oversold during a sideways pullback shortly after the ETF rallied back into bull market territory. Although this consolidation produced no days with significant edges (for example, the VNQ never earned a rating above 6 out of 10 during this sideways stretch), it did serve to help the market work off overbought conditions from the rally that brought the ETF up into bull market territory again in the first place. This area also likely provided a platform for the rally to new, long-term highs that followed.
With a positive, short-term edge of a third of a percent, VNQ has a “consider buying” rating of 9 out of 10.
Be sure to read our latest from 7 Stocks You Need to Know: “Buying the Selling in Weight Watchers”.
David Penn is Editor in Chief of TradingMarkets.com