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Real estate stock rotations update

September 3, 2014

In early July, I showed the trade entry criteria for a short position in Vornado Realty Trust (VNO) against iShares U.S. Real Estate (IYR). The entry signal was given on 17 July and the trade has run into a small profit.

Vornado Realty Trust (VNO) v IYR

The initial entry signal was not timely but the longer term RSI and Performance Ranking divergences took effect and the pair declined up to 25 August. There has been a marginal recovery. Now, I take half of the profit (1.2% drop) and move the stop loss to break even

Update on Washington Real Estate (WRE)

I showed WRE v iShares Real Estate (IYR) on 09 June and updated the situation on 07 July. There has still not been a moving average crossover but there has been a break above the 09 June high.

WRE v IYR daily chart

The Performance Rank (PR) for WRE against the other components of the real estate sector ETF (IYR) is at its highest since 2008, when the last phase of sustained outperformance started (A).

WRE v IYR weekly chart

A similar PR level was reached in 2006 at B but there was not then the combination of factors (pending long term moving average crossover, previous bullish 14 week RSI divergence) that currently exist.


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