Vornado Real Estate trade sets up

In mid June, I showed Vornado Realty Trust (VNO) setting up against iShares U.S. Real Estate (IYR). I will update the situation and set out the trade entry criteria.

Vornado Realty Trust (VNO) v IYR

• The late May 14 week RSI bearish divergence remains in place, along with MACD divergence (not shown here)
• A marginal new weekly closing high was formed on the ratio on 27 June, which had divergence on the Performance Ranking (PR)

Daily chart

• The ideal daily RSI divergence criteria have been met
• The daily closing high for the ratio was on 02 June at 1.49749
• A break below the 13 June low of 1.46605 (below the red line) will be a sell signal
• Earnings for VNO are released on 04 August (this can be checked on www.thestreet.com/event-calendar/index.html). This gives time for the trade to be triggered and run for a few weeks before earnings. Don’t open trades right near earnings releases

Summary

A short position in VNO v IYR will be opened on a daily close below the 13 June low. The stop loss is a daily close above the 02 June high (2.14% higher)

Update on Washington Real Estate (WRE)

I showed WRE v IYR on 09 June. I noted that long term investors may wait for a moving average crossover as a signal on this and the broader market (given WRE’s defensive nature). This might take a while but the next thing to look for is a break above the 09 June high. Even then, this will not be a defined entry signal, the base could take longer to form.

WRE v IYR daily chart