Vornado Realty Trust (VNO) is a real estate investment trust (REIT) that invests in office buildings and street retail in Manhattan. The pandemic changed commuting patterns and the commercial real estate market and New York City has certainly been affected by the changes that have taken place.
New York has been on and off the ropes since 1975 when it needed a bailout under Mayor Abraham Beame, but this time the rapid rise in interest rates and the ability of working from home seems to have created a situation more serious than any other of the prior white-knuckle crises.
Let's check out the charts to see what they have discounted already.
In the daily bar chart of VNO, below, I can see a clear downward trend the past year. Then shares trade below the negatively sloped 50-day and 200-day moving average lines.
The On-Balance-Volume (OBV) line has not made a new low since December creating a bullish divergence. The 12-day price momentum study made a low in March and a higher low in May for another bullish divergence as prices made lower lows.
In the weekly Japanese candlestick chart of VNO, below, I went back to 2019 to show the extent of the decline. The shares trade below the 40-week moving average line. The weekly trading volume has been heavier in the past six or seven months.
The weekly OBV line shows a long decline into early May. The 12-week price momentum study shows higher lows from June to May even though prices made lower lows. This is a relatively large bullish divergence and could foreshadow a price recovery.
In this daily Point and Figure chart of VNO, below, I can see a potential downside price target in the $11 area.
In this weekly Point and Figure chart of VNO, below, I see a downside price target of $0 -- zero. Ouch.
Bottom-line strategy: I worked in New York for the majority of my business career. I have seen ups and downs in the city's fortunes but it has always rebounded and reinvented itself. Optimistic and patient traders who can risk below $10 could probe the long side of VNO.
