CNX Realty – A bullish thought

CNX Realty has been one of the worst performing indices over multiple time frames since its peak in 2008 (January). While it has moved more than 18% from the low, it still trades well below 10% of its all time high. 

In recent times, there has been a plethora of reports on how the sales of real estate has dropped resulting in many developers holding onto their apartment / office complexes at great cost rather than reduce the price and take a hit. 

On the charts though, we seem to be seeing multiple signs of a bottom in process. As with everything else, trying to buy a beaten down sector / stock is fraught with higher risks than betting on those that are already in a good bullish phase.

Here is the CNX Realty chart 

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Since CNX Realty index cannot be traded (bought into), the next best way is to trade the best stocks in that sector. Here is a Relative Strength comparison of the constituents of those stocks that form part of the CNX Realty Index

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As can be seen in the chart above, the best stocks are Phoenix Industries / IB Real and Prestige. Of course, as with all things in market, there is no guarantee that these stocks will return a better risk adjusted return compared to say the worst performer – HDIL. But when betting on already weak sector, its better to be with the stronger ones than the weaker ones.

 

  

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About Prashanth

Have been a full time participant in the stock markets since 1996. Run a Yahoo Group where focus is exclusively on discussions of the Indian Markets using Technical Analysis as the tool (groups.yahoo.com/group/technical-investor)
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