Technical Signal Bodes Well for REIT

The stock is coming off its late-April record peak

Digital Content Manager
May 14, 2020 at 10:42 AM
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Like most of the market, real estate investment trust (REIT) Digital Realty Trust, Inc (NYSE:DLR) has taken a notable tumble off its April 28 high of $158.36. The security is already down 10.9% this month, trading back near its early April levels. Several technical levels on the charts are helping to contain this pullback, however, including the 160-day moving average -- a trendline that's served as a springboard for DLR in the past. 

DLR has come within one standard deviation of this trendline five other times in the past three years. The security was higher one month later after 80% of these signals, and averaged a one-month return of 2.6%. A similar move, from DLR's current perch at $132.34, would put the REIT at $135.78, home to its 2019 peak.

Even with this recent pullback, DLR is up 12% year-to-date, sitting well away from its annual March 23 low of $105. In addition to its 160-day moving average, support at the 120-day trendline is also serving as a solid floor on the charts. 

DLR Chart May 14

Looking elsewhere, analyst sentiment is split down the middle on the data center concern, with eight calling it a "strong buy" and seven saying "hold." The 12-month consensus price target of $145.94, meanwhile is a 10.8% premium to current levels. 

As far as options are concerned, there's not much to write home about. Just 997 calls and 580 puts have crossed the tape in the last 10 days. It is worth noting, however, that DLR's 50-day call/put ratio of 1.4 at the the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 79% of all other readings from the past year. This means this tendency towards calls is unusual. 

 

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