Real Estate: A Tale of Two “Neighborhoods”
Real Estate has displayed impressive strength in the past several sessions, managing to break above resistance and clear both 50 & 200-day moving averages to the upside. Concurrent with these developments, breadth in the space has also received a boost, printing readings of 80% or greater in the number of stocks above their 50 & 200-day moving averages.
Real Estate
The Real Estate sector has gapped through resistance as it trades above the 50 and 200-day moving averages. Holding above the 305 level opens the door to an attack on the December/January highs.
Relative to the S&P 500
On a relative basis, the group is in a sloppy consolidation, above the 50-day moving average but unable to break through resistance. Moving above the December and March peaks sets the stage for further outperformance.
Industry Trends
As with the broader sector, Real Estate Investment Trusts have gapped through resistance as they trade above the rising 50 and 200-day moving averages. Holding above 300 keeps the bulls in control and puts the January highs in play.
Relative to the broader sector, the group has broken above resistance as it trades above the rising 50-day moving average. The July highs are now in play.
The trends for Real Estate Management and Development are decidedly more bearish. The group is below the declining 50-day moving average, which is below the flat 200-day moving average. Below the moving averages, there is an increased risk that support at the 280 level will give way.
Relative to the Real Estate sector, Management and Development has broken down since our last note. The ratio has lost the 50-day moving average and has broken below support. The July lows are now in play.
Breadth
As the sector has managed a strong recovery in recapturing ground above both 50 & 200-day moving averages, so, too, have the number of sector components that have been printing consistent readings above the 80% level. From a trend perspective, note the persistent weakness in both metrics in mid Q1 of this year, dipping down into washed-out conditions. What is noteworthy in the space is that both breadth metrics have steadily recovered and printed consecutively higher readings coming out of those washed-out conditions as the sector has displayed impressive strength recently, which begs the question; will it be enough to keep the sector afloat above the 305-breakout level?
There were 1,409 instances when the percentage of Real Estate sector components above their 50 & 200-day moving averages was greater than or equal to the 80% level for a median gain in the sector of 3.57% with a 68.69%-win rate over the following quarter.
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