January 8th, 2015

Money Flowing to REITs

imageThe market closed on Tuesday 2002.61, down for the fifth trading day in a row, a total of  the total of 4.2% since peaking at 2090.57 on 12/29.  One of the notable highlights of the day, however, was the stellar performance of REITs.

There is a universe of approximately 4000-5000 stocks from which investors to choose but the selection process is daunting since your goal is select a stock from among the 50% that will appreciate and outperform your benchmark index over your investment time horizon.  The best process for winnowing down the list to a more manageable number is by scanning the universe of all stocks against a number of criteria.

Readers and Members know that my favorite scan is called “Stocks on the Move” (I first wrote about this in “Stock Picking Now Feels Like Shooting Fish in a Barrel” just after the Financial Crisis bottom on July 23, 2009) and combines the following technical and fundamental criteria:

  • Price per share > $15
  • Relative Strength Indicator today > top 50%
  • MoneyStream Surge for past week > top 50%
  • EPS percentage change from 4 qtrs back > top 50%
  • Volume surge over past 5 days > top 50%
  • Daily Percentage Price Change > top 50%

[MoneyStream is a Worden Bros. indicator that grew out of joint venture with a large regional brokerage firm to develop a price/volume indicator similar to on-balance volume (OBV) and is interpreted in the same way you by looking for divergences between price and volume trends.]

Yesterday’s “Stocks on the Move” scan filtered out only 108 stocks as compared to the average 250-300 stocks that appeared on the similar lists throughout December.  Notably, about half the stocks on yesterday’s list were REITs, primarily because among all stocks, they were the biggest price movers for the day, had the largest surge in volume and were the best performers relative to the S&P 500 for the day.

Adding to what makes these securities so interesting is the similarity of their charts. Many of these REITs have clearly trending higher appear to have recently crossed out of consolidation patterns, above upper boundary resistance trendlines.  Some of the 40 REITs making the cut yesterday included (click on symbol to see chart):

  • Retail
    • SKT (Tanger Factory Outlet)
    • SPG (Simon Property Group)
    • EQY (Equity One)
  • Residential
    • AEC (Associated Estates)
    • SNH (Seniorhousing Properties)
  • Office
    • OFC (Corporate Office Properties)
    • COR (Coresite Realty)
  • Healthcare
    • SBRA (Sabra Healthcare)
    • OHI (Omega Health)
  • Diversified
    • BDN (Brandywine Realty)
    • RPAI (Retail Properties of America)
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