Even though we’re feeling bullish about REITs at the moment, we also see data moving together to give us a short opportunity in one of them.
Let me explain.
Given:
- The Real Estate (XLRE) sector is coming under some pressure here in December.
- A rising US Dollar and interest rate environment is whipping up some headwinds for stocks.
- The recent market downturn following all-time highs and escalating volatility (the Dow down 1,123 points, Nasdaq 100 down 791, S&P 500 down 178, and Volatility S&P 500 Index (VIX) up 74% on 12/18/24).
- A historically difficult mid-December “micro” seasonality period, up to and possibly through December 20th.
- A breakdown in Welltower, Inc. (WELL) technicals.
- We anticipate additional near-term pressures for Welltower, Inc. (WELL) given the current conditions.
Welltower, Inc., (WELL) is a Real Estate Investment Trust (REIT) that operates as a healthcare infrastructure company and invests in senior housing operators, post-acute providers, and health systems to fund real estate infrastructure.
WELL (Daily Chart)
We like WELL as a short opportunity because:
- It’s currently below $128 and to the downside
- With an initial target of $120 (the technical 38.2% Fibonacci retracement level from the April ‘24 lows to Nov ‘24 highs)…
- And a secondary target down to the $114 level on additional absolute & broader market weakness (50% Fibonacci level).
- Stops above the $131 level (the most recent price high following the technical breakdown of both the upward diagonal and horizontal support lines).
It’s worth looking at WELL and seeing if it fits in your overall trade plan!
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Happy trading!
