Host Hotels & Resorts
Host Hotels & Resorts (HST - Get Report) is threatening a breakout of its own this week. The $12.5 billion hotelier owns 121 upscale hotels spread across the world -- but the real draw is this REIT's price chart.
Right now, HST is forming a rectangle pattern, a consolidation setup that's bounded by horizontal resistance above shares at $17.25 and horizontal support below shares at $16.50. The rectangle pattern is a lot like the pennant pattern in RPAI; it gives shares a chance to bleed off some overbought momentum after a big move higher. Resistance at $17.25 is a price level that's acted as a ceiling for shares well before the rectangle started forming, and that fact makes a breakout through resistance all the more significant.With shares testing that level this week, we could see a buy signal sooner rather than later: if shares hold above $17.25 today, it makes sense to take a position in this stock. Whenever you're looking at any technical price pattern, it's critical to think in terms of buyers and sellers. Triangles, rectangles, and other pattern names are a good quick way to explain what's going on in this stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares. Resistance at $17.25 is a price where there's an excess of supply of shares; in other words, it's a place where sellers have been more eager to take recent gains and sell their shares than buyers have been to buy. That's what makes the breakout above $17.25 so significant -- it indicates that buyers are finally strong enough to absorb all of the excess supply above that price level. That's when you want to own shares.