REITs are on the rise! For today’s Trade of the Day, we will be looking at a Keltner Channel chart for SL Green Realty Corp. (SLG), highlights Chuck Hughes, co-founder of Hughes Optioneering.
SLG is New York City’s largest office landlord, a fully integrated REIT that is focused primarily on acquiring, managing, and maximizing value of Manhattan commercial properties. Let’s begin to break down the Keltner Channel chart for SLG.
The Hughes Optioneering Team uses the Keltner Channels as an indicator to determine whether a stock is overbought or oversold. If a stock’s daily stock price is trading above the upper Keltner Channel, this signals that the stock is temporarily overbought and subject to a retracement.
Even stocks that are in the strongest bull trends do not advance in a straight line. There are always price retracements along the way. When a stock becomes overbought, its price will typically decline soon after as the inevitable profit taking occurs.
The SLG daily price chart shows that the stock is in a strong price uptrend and has become overbought several times. You can see this as SLG has traded above the Upper Keltner Channel on multiple occasions recently.
But in every scenario when SLG became overbought, the stock soon experienced a pullback. Finding opportunities when a stock experiences a pullback is why the Hughes Optioneering Team uses the Keltner Channels. They help us find a lower-risk entry point.
The Keltner Channel “Buy Zone” occurs when a stock is trading below the upper Keltner Channel. Once the daily price is trading below the upper channel, it provides a lower-risk buying opportunity as the stock is likely to rally.
Recommended Action: Buy SLG.
