Federal Realty: The Tide May Be Turning

 | Jul 10, 2017 | 2:27 PM EDT
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Federal Realty Investment Trust (FRT) has corrected lower the past 12 months but the decline looks like it is in its last inning so we should check and see if we might want to consider probing the long side.

Let's visit with our favorite charts and indicators below to see how things are shaping up.

In this daily chart of FRT, below, we can see that prices are testing the declining 50-day moving average line. FRT is comfortably below the declining 200-day moving average line. The daily On-Balance-Volume (OBV) line has generally moved lower with the weak price action the past 12 months. A bearish OBV line tells us that sellers of FRT are more aggressive than the buyers. 

In the lower panel is the 12-day momentum study which shows higher lows from March to May while prices make lower lows. This different price and indicator action is called a bullish divergence.

In this weekly bar chart of FRT, below, we can see that prices are below the declining 40-week moving average line. The weekly OBV line has been moving sideways the 18 months or so, which I find pretty amazing considering the downtrend. The weekly Moving Average Convergence Divergence (MACD) oscillator is poised to cross to the upside below the zero line for a cover shorts buy signal.

Bottom line: A bullish momentum divergence and a MACD cover shorts buy signal is a good start for a potential bottom formation. Aggressive traders could consider going long FRT on a strong close above $130 risking a close below $120.

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