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Jun 27, 2023

Swing Trader: Sector Rotation Strategy (TA&FA) Generates 24.46% Return for DLR

Swing Trader: Sector Rotation Strategy (TA&FA) Generates 24.46% Return for DLR

Sector rotation strategies have long been favored by swing traders who aim to capitalize on the cyclical nature of different sectors within the stock market. By actively switching investments from one sector to another based on technical and fundamental analysis, swing traders seek to outperform the broader market. In this article, we examine how a sector rotation strategy employing both technical analysis (TA) and fundamental analysis (FA) generated impressive returns of 24.46% for DLR (a fictional stock symbol) while the Relative Strength Index (RSI) indicator signaled a bullish shift.

Understanding Sector Rotation Strategy

Sector rotation strategy involves moving capital from sectors that are expected to underperform into sectors that are anticipated to outperform in the current market environment. This strategy relies on the notion that different sectors perform better at different stages of the economic cycle.

Swing traders using sector rotation typically identify sectors that exhibit positive momentum and strong fundamentals. They aim to enter positions within these sectors while simultaneously exiting positions in sectors showing signs of weakness. By actively rebalancing their portfolios, swing traders aim to capture the potential upside of specific sectors and reduce exposure to sectors that may face headwinds.

The Role of Technical Analysis (TA)

Technical analysis plays a crucial role in implementing a sector rotation strategy. Swing traders employ various technical indicators to identify trends, momentum, and potential reversals in specific sectors. One widely used indicator is the Relative Strength Index (RSI).

DLR's RSI Indicator and Oversold Territory

Recently, DLR's RSI indicator climbed out of the oversold territory, indicating a potential bullish shift. The RSI is a momentum oscillator that measures the speed and change of price movements. It ranges from 0 to 100, with readings above 70 indicating overbought conditions and readings below 30 suggesting oversold conditions.

When a stock's RSI enters the oversold territory, it implies that the stock may have been sold off excessively and could be due for a rebound. Swing traders utilizing a sector rotation strategy closely monitor such indicators to identify opportunities for potential entry points.

DLR's Impressive Performance

By combining technical analysis and fundamental analysis, swing traders implementing a sector rotation strategy achieved a remarkable return of 24.46% for DLR. This result demonstrates the effectiveness of this strategy in capturing potential market opportunities.

DLR's strong performance can be attributed to the favorable sector rotation decisions made by swing traders. By actively switching from underperforming sectors into sectors exhibiting positive momentum and strong fundamentals, swing traders were able to ride the upward trend in DLR's price.

Related Ticker: DLR

Momentum Indicator for DLR turns positive, indicating new upward trend

DLR saw its Momentum Indicator move above the 0 level on June 04, 2024. This is an indication that the stock could be shifting in to a new upward move. Traders may want to consider buying the stock or buying call options. Tickeron's A.I.dvisor looked at 78 similar instances where the indicator turned positive. In of the 78 cases, the stock moved higher in the following days. The odds of a move higher are at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Moving Average Convergence Divergence (MACD) for DLR just turned positive on June 04, 2024. Looking at past instances where DLR's MACD turned positive, the stock continued to rise in of 49 cases over the following month. The odds of a continued upward trend are .

DLR moved above its 50-day moving average on May 13, 2024 date and that indicates a change from a downward trend to an upward trend.

The 10-day moving average for DLR crossed bullishly above the 50-day moving average on May 13, 2024. This indicates that the trend has shifted higher and could be considered a buy signal. In of 17 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where DLR advanced for three days, in of 338 cases, the price rose further within the following month. The odds of a continued upward trend are .

The Aroon Indicator entered an Uptrend today. In of 258 cases where DLR Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 9 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where DLR declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

DLR broke above its upper Bollinger Band on June 10, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 78%.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating outstanding price growth. DLR’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 87, placing this stock slightly better than average.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.410) is normal, around the industry mean (1.970). P/E Ratio (47.303) is within average values for comparable stocks, (62.089). DLR's Projected Growth (PEG Ratio) (28.780) is very high in comparison to the industry average of (6.942). Dividend Yield (0.034) settles around the average of (0.068) among similar stocks. P/S Ratio (8.006) is also within normal values, averaging (7.098).

Notable companies

The most notable companies in this group are PROLOGIS (NYSE:PLD), American Tower Corp (NYSE:AMT), Simon Property Group (NYSE:SPG), Annaly Capital Management (NYSE:NLY), Rithm Capital Corp (NYSE:RITM), Tanger (NYSE:SKT), Innovative Industrial Properties (NYSE:IIPR).

Industry description

A real estate investment trust (REIT) is a company any that owns, and in most cases, operates, income-producing real estate – ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and timberlands. Some REITs are involved in financing real estate. Equity REITs invest in and own properties, while mortgage REITs own and invest in property mortgages. REITs are required by law to pay out at least 90% of their annual taxable income (excluding capital gains) to shareholders in the form of dividends. Some REITs could be more cyclical than others; for example, when an economy is undergoing a recession, hotel REITs could be more vulnerable, compared to say healthcare REIT given that healthcare needs are less likely to depend on economic cycles. American Tower Corporation, Prologis, Inc. and Crown Castle International Corp are some of the biggest REIT companies in the U.S.

Market Cap

The average market capitalization across the Real Estate Investment Trusts Industry is 5.34B. The market cap for tickers in the group ranges from 51.9K to 243.79B. COFRF holds the highest valuation in this group at 243.79B. The lowest valued company is PDNLB at 51.9K.

High and low price notable news

The average weekly price growth across all stocks in the Real Estate Investment Trusts Industry was 2%. For the same Industry, the average monthly price growth was -2%, and the average quarterly price growth was -3%. WHLR experienced the highest price growth at 54%, while PW experienced the biggest fall at -28%.

Volume

The average weekly volume growth across all stocks in the Real Estate Investment Trusts Industry was -13%. For the same stocks of the Industry, the average monthly volume growth was -6% and the average quarterly volume growth was -37%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 50
P/E Growth Rating: 51
Price Growth Rating: 52
SMR Rating: 79
Profit Risk Rating: 87
Seasonality Score: 1 (-100 ... +100)
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A.I.Advisor
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General Information

a real estate investment trust

Industry RealEstateInvestmentTrusts

Profile
Fundamentals
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Industry
Real Estate Investment Trusts
Address
5707 Southwest Parkway, Building 1
Phone
+1 737 281-0101
Employees
3664
Web
https://www.digitalrealty.com
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