Don't Ignore This Chart!

Is Real Estate Coming to Life Again?

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Weekly price chart of VNQ with Relative Strength and RRG-Lines

Real Estate started to lose relative strength vs. VBINX in November, then crossed over into the lagging quadrant on the weekly Relative Rotation Graph in December. On the weekly RRG for asset classes, VNQ is still well inside the lagging quadrant and considered one of the weak(er) asset classes. However, something may be cooking.

On the weekly price chart above, VNQ just broke out of a downward sloping consolidation/correction in upward direction. On the weekly RS-Line, the recent low now connects with the lows that were formed in 2018, so that a meaningful trend line (support-) can now be drawn connecting those three lows.

VNQ tail heading for Leading quadrant on daily RRG

This improvement is already becoming visible on the daily RRG, where VNQ rotated back from lagging into improving with an increasing RRG-velocity (distance on tail from day to day).

VNQ seasonality for January shows an outperformance over VBINX 60% of the time, with an average outperformance of 0.5%.

Although it is very early given the position on the weekly RRG, I think there are enough signs that warrant some extra attention for VNQ/Real Estate in the coming weeks. Will it be the surprise asset class for Q1-20?

--Julius


My regular blog is the RRG Chartsblog. If you would like to receive a notification when a new article is published there, simply "Subscribe" with your email address.

Julius de Kempenaer

Senior Technical Analyst, StockCharts.com

Creator, Relative Rotation Graphs

Founder, RRG Research


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Julius de Kempenaer
About the author: is the creator of Relative Rotation Graphs™. This unique method to visualize relative strength within a universe of securities was first launched on Bloomberg professional services terminals in January of 2011 and was released on StockCharts.com in July of 2014. After graduating from the Dutch Royal Military Academy, Julius served in the Dutch Air Force in multiple officer ranks. He retired from the military as a captain in 1990 to enter the financial industry as a portfolio manager for Equity & Law (now part of AXA Investment Managers). Learn More
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