My Favorite REIT Right Now

• stevenplace
• September 22nd, 2010

Commercial real estate names saw a great Monday, with many breaking out above key technical support. The market may be due for a breather, but I’m currently scouring components of the IYR looking for strong technical setups that will allow me to manage my risk. CRE names are still hated on by many out there, but they are stable, they don’t gap, and they offer dividends if that’s your thing.

Let’s take a look at a technical setup in DLR, although there’s more to this than the chart.

The weekly chart is still in a solid uptrend, and the current resistance at 64 is the only thing that stands in the way of all time highs. Even if the market pulls back I will still be watching to see how this bases out and whether it can continue its uptrend.

But there’s also a “sexiness” to this REIT. Most CRE names are in either office or residential, where they hold people. DLR holds data. They build out wholesale data providers– so this is more like a RAX than it is an SPG.

This is important to note because the stock has exposure in the “cloud computing” trend that has led to significant performance in names like FFIV, CRM, and VMW. As companies continue to invest in cloud computing solutions, the data will have to go somewhere– and if they don’t build out their own data centers, they’ve got to rent from somewhere.

It’s very important to differentiate from a trade and an investment, and I would be doing the latter. I’m looking for a sympathy move with the rest of the cloud names as long as IYR holds strong.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Tickers: crm, dlr, ffiv, iyr, RAX, spg, vmw

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