Bearish Signals Generated on 3 Real Estate ETFs
Interest rates in the U.S. have been rising over the last six months, not the Fed Funds rates that the Federal Reserve controls, but the 10-year and 30-year Treasuries. If we look at a daily chart for the 10-year treasury yield, it has jumped from 0.504% last August to a recent high of 1.193%.
The trek higher has been steady and consistent. If this was a stock chart I was looking at, I would be looking to buy it the next time it cycled lower a little. You can see the trend line that connects the lows back to last August. It’s currently sitting right around 1.0%.
If you looked at the title of this article, you might be wondering what rising interest rates on treasuries have to do with real estate ETFs. The connection is that when the rates on less risky treasuries rise, other income generating investments become less appealing.
Like we see when bonds become less attractive, the price has to fall by enough to make the yield attractive again. This could be what the bearish signals are suggesting about the real estate ETFs—that the yield isn’t as attractive now because treasury yields have been rising.
Regardless of the reasoning, the three most actively traded real estate ETFs all generated bearish signals on February 5. Those signals came from the Tickeron A.I. trend prediction tool. The three ETFs are the iShares US Real Estate ETF (IYR), Vanguard Real Estate ETF (VNQ), and Real Estate Select Sector SPDR (XLRE).
The bearish signals call for a decline of at least 4% over the next month, but there is a pretty significant difference in the confidence level between the three signals. The signal for the XLRE is 76% while the confidence levels on the other two are both at 54%.
Because these are ETFs, we don’t have the traditional fundamental indicators that we can break down, but the technical indicators are the same as with an individual stock. In the case of these three funds, they all three have seen bearish signals come from the RSI Indicator, the Aroon Indicator, and the Bollinger Bands indicator. It is also worth noting that all three are in overbought territory based on the daily stochastic indicators.
Looking back at the chart of the 10-year Treasury yield, it looks like it is ready for a short cycle lower at this time, so we could see the ETFs and the treasury yield move lower together.
The complete analysis and comparison of the three funds appears below. The information from Tickeron shows how the funds compare to one another as well as other ETFs and stocks.
XLRE in +0.67% Uptrend, rising for three consecutive days on June 01, 2023
Moving higher for three straight days is viewed as a bullish sign. Keep an eye on this stock for future growth. Considering data from situations where XLRE advanced for three days, in of 350 cases, the price rose further within the following month. The odds of a continued upward trend are .
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 59 cases where XLRE's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
XLRE may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on June 01, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on XLRE as a result. In of 90 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for XLRE turned negative on May 15, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 41 similar instances when the indicator turned negative. In of the 41 cases the stock turned lower in the days that followed. This puts the odds of success at .
XLRE moved below its 50-day moving average on May 16, 2023 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for XLRE crossed bearishly below the 50-day moving average on May 22, 2023. This indicates that the trend has shifted lower and could be considered a sell signal. In of 17 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where XLRE declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for XLRE entered a downward trend on June 01, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
Notable companies
Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
Category RealEstate
| 1 Day | |||
|---|---|---|---|
| ETFs / NAME | Price $ | Chg $ | Chg % |
| XJH | 33.97 | 0.99 | +3.01% |
| iShares® ESG Screened S&P Mid-Cap ETF | |||
| YALL | 25.28 | 0.43 | +1.75% |
| God Bless America ETF | |||
| HDEF | 23.25 | 0.37 | +1.62% |
| Xtrackers MSCI EAFE High Div Yld Eq ETF | |||
| UDIV | 33.39 | 0.53 | +1.60% |
| Franklin US Core Dividend Tilt Index ETF | |||
| FLIA | 19.68 | -0.16 | -0.80% |
| Franklin International Aggregate Bd ETF | |||
XLRE and
Correlation & Price change
A.I.dvisor indicates that over the last year, XLRE has been closely correlated with ICF. These tickers have moved in lockstep 100% of the time. This A.I.-generated data suggests there is a high statistical probability that if XLRE jumps, then ICF could also see price increases.
| Ticker / NAME | Correlation To XLRE | 1D Price Change % | ||
|---|---|---|---|---|
| XLRE | 100% | +2.11% | ||
| ICF - XLRE | 100% Closely correlated | +2.05% | ||
| SCHH - XLRE | 100% Closely correlated | +2.29% | ||
| IYR - XLRE | 100% Closely correlated | +2.24% | ||
| VNQ - XLRE | 99% Closely correlated | +2.44% | ||
| FREL - XLRE | 99% Closely correlated | +2.42% | ||
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