## Two Real Estate Stocks Flashing Warning Signs: Are They Overbought?
Investors who prioritize momentum in their trading strategies might want to take a closer look at two real estate stocks:
SL Green Realty Corp (SLG)
andDigital Realty Trust Inc (DLR)
. Both companies are currently showing signs of being overbought, based on their Relative Strength Index (RSI) values.The RSI is a technical indicator that measures a stock’s price momentum. It helps traders gauge how strongly a stock is moving up or down compared to its recent price history. A reading above 70 is generally considered overbought, suggesting that the stock may be due for a correction.
SL Green Realty Corp (SLG)
On October 16th, SL Green Realty reported a quarterly loss of 21 cents per share, exceeding analyst expectations of a 50-cent loss. The company also surpassed sales estimates, reporting $229.691 million in revenue compared to the projected $142.537 million. Despite the positive earnings report, SL Green’s stock has been on a roll, gaining approximately 12% over the past month. Its 52-week high sits at $79.92.
Currently, SL Green’s RSI stands at 70.97, edging into overbought territory. Shares closed at $77.83 on Wednesday, reflecting a 0.3% increase.
Digital Realty Trust Inc (DLR)
Digital Realty Trust exceeded expectations with its third-quarter FFO (Funds From Operations) results and raised its FY24 FFO guidance. The company’s CEO, Andy Power, highlighted their record-breaking new leasing activity, with over $520 million in new leases secured during the quarter, more than double their first-quarter record. This impressive performance drove their backlog up nearly 60% compared to their previous record.
This positive news has propelled Digital Realty’s stock price upwards, gaining around 13% over the past month. The stock’s 52-week high sits at $193.88.
With an RSI of 76.86, Digital Realty Trust is firmly in overbought territory. Shares closed at $182.17 on Wednesday.
What to Consider
While overbought signals can be a warning sign, it’s important to remember that they are not always predictive of a sudden downturn. Factors like strong fundamentals, continued positive news, and market trends can all influence a stock’s future performance.
Investors who are concerned about the potential for a correction in these real estate stocks might consider waiting for a pullback before entering or increasing their positions. However, for investors who believe in the long-term potential of these companies, the current overbought status might not be a major concern.
It’s always crucial to conduct thorough research and consult with a financial advisor before making any investment decisions.
