Real Estate Analysis

Chartz with Jartz - Over the 6 trading periods, The Real Estate Select SPDR Fund (XLRE) moved up over 4.5% to a new all-time high. As Real Estate has been the S&P's best performer since late August, many investors are curious as to why REITs are performing the way they are. From a macroeconomic standpoint, the US has had mixed expectations for future growth following a summer lull amidst poor job reports and the rise of the delta variant. With so many contradicting factors, why is real estate improving? The fundamental answer lies within the IT job market. There has recently been growth in the industry creating new jobs and increasing salaries. With increased salaries, analysts believe they will take their new earnings to the residential housing market. As a result, we have seen a big momentum push in residential real estate stocks and the sector as a whole.

From a technical standpoint, we see XLRE moving sideways in a 2.5% window for over 5 weeks. This consolidation move leads a technical analyst to believe that the security is preparing itself for larger move. This move is normally based on the previous move before the consolidation. On the one year chart above you can the price hovering over the 20 day Moving Average Line (Green) while the Relative Strength Index above is continually bouncing off the 50 line. Both indicators support the theory that the Moving Average Line is support and it is just a matter of time before we see a breakout. For more analysis and information on individual stocks and ETFs tune in every Wednesday to our Blog.

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