REITs are rallying.
Real estate investment trusts, or REITs, have been participating in the broad stock market rally in 2019, the popular Dow Jones REIT Total Return Index is charging more than 22% higher since the calendar flipped to January.
It's not hard to see why REITs are appealing in this market environment. With investors pricing in a rate cut on the heels of this afternoon's FOMC meeting, the high yields paid by REITs continue to look enticing to income investors.
Public Storage has been one of the stronger names in the sector this year, all while paying out a 3.26% dividend yield.
Yesterday, the firm reported earnings of $2.57 per share for the second quarter, ever-so-slightly edging out analysts' average estimates. With earnings in the rearview mirror, now looks like a great time to be a buyer in Public Storage.
To figure out why - and how to trade it from here - we're turning to the chart for a technical look.
Public Storage is catching a bid this afternoon, but the tiny earnings beat that the company posted Tuesday isn't the main driver. Instead, Public Storage is charging higher thanks to a textbook bullish technical price setup.
Shares have been in an extremely well-defined uptrending channel all year long. Year-to-date, every test of trendline support has been followed up by a bounce higher within that price channel. Now, as shares catch a bid at support for the fifth time in 2019, we're staring down another solid buying opportunity in shares.
Relative strength, the indicator down at the bottom of the stock chart, adds some extra confidence to the buying pressure we're seeing today. With relative strength holding onto an uptrend of its own here, we've got a clear signal that Public Storage continues to systematically outperform the rest of the broad market in this environment.
Despite the bullish trajectory, risk management is key here. With the 50-day acting like a near-perfect proxy for trendline support since the end of February, it makes sense to park a protective stop on the other side of the 50-day. Simply put, if Public Storage violates that line in the sand, then the uptrend is over and it doesn't make sense to own it anymore.
Meanwhile, Public Storage looks strong here. With earnings risk off the table, now looks like as good a time as any to add it to your portfolio.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.