Even on a day of downside market action, some stocks and ETFs manage to show some decent gains. Housing-related trades have been winners lately, with stocks such as Lennar (LEN) and Standard Pacific (SPF) holding up well, even as they pull back from prior highs.
While I do enter into trades that capitalize on the downside in a market downturn, I also track investment ideas that may be pulling back, but are holding up better than the broader market.
Some examples of strong technical performers include retailers such as Lumber Liquidators (LL) and Beacon Roofing (BECN). Both are consolidating above key moving averages, which is solid action at a time when many stocks have sliced key price lines. Even companies from the mortgage origination business, such as Ellie Mae (ELLI) and Nationstar Mortgage (NSM) have been showing good technical support during the market downturn.
Some ETFs with exposure to the housing sector are also outperforming. The Dow Jones U.S. Home Construction Index Fund (ITB) was trading to the upside Thursday as the market declined, hovering near its five-day exponential moving average. It's trading at its best levels since October 2008, just below Tuesday's high of $17.30. Top holdings within the fund include D.R. Horton (DRI), Lennar, and Toll Brothers (TOL).
Another strong real-estate-related ETF hails from the land of leverage. The Direxion Daily Real Estate Bull 3x Shares (DRN) is more oriented toward a variety of REITs, not just housing. This ETF was trading about 1.6% higher mid-session Thursday, to $75.85. Prior to pulling back recently, it had been hitting resistance just above $78. DRN seeks performance that's 3x that of the MSCI U.S. REIT index.
This ETF consists of REITs and even other ETFs, including the Vanguard REIT ETF (VNQ). VNQ itself is another ETF worth a look right now. It's been holding above short- and medium-term price lines. Early in Tuesday's session, it rallied to a nearly three-year high of $66.70, before pulling back as the market sold off that same day.
VNQ offers an advantage that has likely kept some investors in: It has a dividend yield of 3.3%. Holdings include Simon Property Group (SPG), Public Storage (PSA), Equity Residential (EQR) and Ventas (VTR).
All of those have been performing well. Simon, which operates malls and shopping centers in 41 states, is up 22%, year-to-date, and has been holding above key moving averages, just below Tuesday's all-time high of $159.64.
Public Storage, too, is hovering just below prior highs, potentially forming a handle to a consolidation that began in early May. It was trading just above $145 on Thursday, which is higher than its short- and medium-term moving averages.
Equity Residential was in rally mode Thursday, advancing 1.3% to $63.83, attempting to definitively clear a consolidation that has been in place for a year. The stock has hit snags as it has attempted to overcome resistance around $64.
Ventas is another name hitting resistance around the $64 mark. But it, too, is holding just below previous highs. On Thursday, the REIT was trading around $63.58. It has sported tight weekly closes in the past three weeks, a potential springboard for further price gains.