...

Should You Short This Stock as it Gets Slammed by Rising Interest Rates?

Table of Contents

Disclaimer

All articles are for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade or investments.

Disclaimer

All articles are for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade or investments.

Table of Contents

This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.

Source: unsplash.com

Real Estate Investment Trusts (REITs) have taken a beating ever since the Fed announced its intention to raise interest rates.

This is because REITs are often heavily leveraged. As a result, higher interest rates erodes their profitability, which causes their share price to get slammed.

And as the prices of REITs slide, there could be short position trading opportunities.

Let’s find out more about Equity Residential before determining if there’s a short position trading opportunity.

 

Brief History of Equity Residential

 

Source: unsplash.com

Equity Residential was founded back in 1969.

A couple of years after its founding, the real estate market collapsed. However, Equity Residential was well positioned to capitalize on it, snapping up apartment buildings in fast-growing cities.

This aggressive property acquisition behavior continued and became a signature of the REIT.

Has this aggressive culture produced outsized returns?

Let’s find out in the next section!

 

Business Model and Financials

Income statement of Equity Residential

Looking at the income statement of Equity Residential above, you can tell that its total revenue has been pretty stagnant over the years.

Is it premature to evaluate that Equity Residential’s financial health isn’t as strong?

Diving into its net income will provide more clues.

Its net income in 2015 came in at $870m. This exploded in 2016, reaching almost $4.3b! That’s a mind boggling 393% increase from 2015!

Sadly, that supernormal performance was an outlier and its net income reversed to around $600m in 2017 and 2018.

From thereon, its net income has experienced growth to $970m in 2019 and has held steady.

Rents in developed nations shot up due to COVID-19 and have not fully eased.

Given the stagnant total revenue and net income in recent years, it’s a worrying sign.

Does the weakness in its financial report mean that you should short its shares now?

 

Technical Analysis on Equity Residential (NYSE: EQR)

Chart of Equity Residential

Can you tell if the trend of Equity Residential’s shares is up or down?

Yes, it’s in a downtrend.

You can tell by looking at the direction its price has been heading in the past months, through the color of the majority of its candles (body and outline), and the sheer number of down pointing arrows.

Did you also notice that there’s a red arrow above its latest candle?

That red arrows indicates a new downtrend has been formed.

Before you rush to short-sell the shares of Equity Residential, there’s another indicator you’ll need to watch – the Trend Impulse Factor indicator.

More accurately, you’ll want to see the bar of the Trend Impulse Factor indicator turn dark green in color. A dark green bar indicates the possibility of continued momentum, which will be helpful as money is only made when there’s a sustained price movement.

Therefore, I think that the share price of Equity Residential may not get slammed further anytime soon; its shares isn’t ripe for a short position trade yet.

 

Conclusion

Source: unsplash.com

REITs have been getting hammered due to the soaring interest rates to combat inflation.

As the Fed has announced further rate hikes in 2023, I don’t think REITs will suddenly turn bullish or recover anytime soon.

The share price of Equity Residential has been in a steady downtrend and this doesn’t look like it’s going to stop soon.

However, I don’t think that you should short its shares because the tried-and-tested indicators aren’t suggesting that you should short its shares.

Trading stocks without a proper system can be highly risky. This is why the TradersGPS (TGPS) was created.

The indicators (red and green arrows and Trend Impulse Factor) will help you determine if a stock is ready for action to be taken. You won’t have to feel in the dark and make wild guesses.

 

1 Simple Strategy To Reap Explosive Profits This Year (2023):

2022 by far has been one of the toughest years to trade in the past 5 years.

Lots of Singaporeans who dabble in trading or investments have suffered badly this year.

From inflation, interest rates, Ukraine war, financial tensions between US & China, and most recently, the dramatic crypto meltdown…

We’ve seen nothing short of constant volatility and a persistently declining stock market this year.

Many people I know have incurred 5 to even 6 figures losses and others are holding on to 20-80% unrealized losses.

It’s unfortunate to see that the goals of becoming financially independent to provide better lives for their family have turned into losses for many.

Yet, as a matter of fact, all these losses could have been easily prevented and turned into profits instead if these people had the right knowledge.

Having the right knowledge, and having a tested and proven methodology for trading strong stocks

– This is exactly what helped me and over 5000+ of my students to end the year with decent gains in our portfolio despite the odds stacked against our favor.

Within our SMT community, we use a really simple yet powerful 3-step system that allows us to identify and capitalize on strong stocks.

This is why even amidst the poor performing market this year, we are still able to extract extensive profits from the market – by identifying ‘hidden gem’ opportunities.

And if we are able to reap decent gains in such a bad market this year, think about how immense the profit potential would be like in 2023…

Especially when the market is poised to trend stronger upwards in 2023 and the number of opportunities would be greater than ever.

With that said, it is extremely important to know what to do and how to best take advantage of the markets in 2023 while maintaining a really low risk.

I will be sharing about the ONE strategy you’ll ever need to know to reap maximum profits in the market in my upcoming LIVE training (100% free).

This training will be nothing like you’ve seen before.

I will hold nothing back to reveal my exact game plan and strategy to skyrocket your portfolio in 2023.

Register now here before seats are capped out.

I will show you the full process from identifying winning stocks all the way to executing the trade, and how it can be done in just 15 minutes.

I will also be opening up questions to the floor where you can ask me to analyze ANY stock of your choice,

The biggest gains are not made during an ongoing bull market, but from the preparation before the bull market even happens.

There is no better time than now to be introduced into the world of profitable stock trading.

After all, what excuse do you have to not pick up the skill to capitalize on this impending huge opportunity at this very moment?

I’ll see you real soon!

Click HERE to register your seat before we hit full capacity!

 

Share this post:

Facebook
Twitter
WhatsApp
Pinterest
Telegram

Eric Lim

Having being coached in trading and in many aspects of life, Eric is a firm believer of success being the result of having a strong foundation. Hardwork, dedication, and practice are essential ingredients. He's always fascinated by the stock market and enjoys sharing his knowledge and discovery of the markets as a form of giving back to society. Swing and position trading are his favorite trading strategies.

Leave a Reply

Your email address will not be published.

Related Posts

Share this post:

REACH YOUR HIGHEST TRADING PERFORMANCE

Copy My No Brainer Trading Strategy

REACH YOUR HIGHEST TRADING PERFORMANCE

Copy My No Brainer Trading Strategy

Get Started HERE With Our FREE Market-Timing 101 Video Course

X

Copy My No-Brainer Trading Strategy