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TheStreet Open House

5 Trades to Take as the Market Returns to Normal

Stocks in this article: RPMSHLDFSLRDDRATO

DDR

Last up is retail and office REIT DDR (DDR) a name that's rallied hard in 2012, jumping more than 23% on top of a 3% dividend yield. Ultimately, DDR is a good example of why it's dangerous to chase yield. While this stock has turned out good performance so far this year, a topping pattern is sending investors a sell signal this week. I'd recommend listening.

DDR has been forming a double top pattern for the last couple of months, topping out twice around the $15.60 resistance level. For a double-top pattern, the sell signal comes when shares break down below the trough that separates the two peaks, and for DDR, that breakdown came on Friday. If we get confirmation today (by keeping this stock below $15.20) then DDR becomes a short candidate in the near-term.

Think of that $15.20 level as the nearest place where there's a glut of buyers. After shares of DDR made their first top and declined, buyers were willing to jump in at $15.20 and catch the stock by overwhelming selling pressure. But after the second top, those buyers just aren't there. That's why DDR was able to fall through $15.20.

If you're looking for a place to enter this stock, wait for shares to find support and bounce higher before putting your cash at risk. You don't want to be the sole buyer trying to halt the drop.

-- Written by Jonas Elmerraji in Baltimore.

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At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

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