Vornado Realty Trust
Last up is Vornado Realty Trust (VNO), a $15 billion office and retail REIT that has operations spread from New York to California. VNO rallied hard into the end of 2011, but shares topped out by May. Since then, this stock's been consolidating sideways and looking considerably more bearish. Here's why.
VNO is currently forming a descending triangle, a setup that's formed by a downtrending resistance level above shares and a horizontal support level below them. Essentially, as shares bounce in between those two price levels, they're getting squeezed closer and closer to a breakdown below support. For VNO, that support level comes in at $79.
It's important to think of technical patterns in real terms (in terms of buyers and sellers) rather than in terms of shapes; the "descending triangle" title is a good way of describing how the setup looks, but it's a poor way of describing why it works. Instead, think of resistance as the place where sellers are more powerful (or more eager) than buyers and support as the place where buyers are more powerful than sellers. Because VNO has been making lower highs, we've got an indication that sellers are exerting more and more control over this stock. Momentum (again, measured by RSI) backs up that argument with a downtrend.The fact that a REIT yielding 3.44% hasn't caught a more substantial bid after QE3 is a negative sign; I'd steer clear of shares until the longs wake up. To see this week's trades in action, check out the Technical Setups for the Week portfolio on Stockpickr. -- Written by Jonas Elmerraji in Baltimore.
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