REITS and Retailers Lead Today's Rally

Below (click to enlarge) I have captured an excerpt of the excellent StockCharts Market Summary page, which provides a graphical and numerical overview of the day’s action across a wide variety of indices, sectors, geographies and asset classes.

Today I am focusing on the sectors that are leading the rally. These include REITs and retailers, with support from transports, including the air lines. Frankly, there is very little sector weakness across the board, just degrees of strength. While not shown in the graphic below, the yen is also doing well today.

I am somewhat skeptical that today’s rally will have legs, but as long as the breadth of the rally continues, the odds suggest that a reversal is not a high percentage play.

[source: StockCharts]

Comments

[Mad Hedge F...:]

Sell into it. The imminent demise of General Motors (GM) will be a nail in the coffin for the commercial real estate market, which I believe will be the financial crisis of 2009. Some 2,000 dealers are being axed, dumping hundreds of millions of square feet on to a market that least wants it. These were the guys who sponsored the local baseball team and Girl Scout cookie sales, and their absence will rip the hearts out of hundreds of American communities. Much of this is prime space, near dense populations, with great frontage, adjacent retail space, completed site work, mitigated environmental work, and already zoned for commercial use. Some might get turned into mini malls, but I’m afraid more will end up as indoor climbing walls and paintball battlefields. Commercial real estate sales are off 73% this year, while vacancies have catapulted to 16.7%. Banks have seized 464 properties so far in 2009, including $7 billion worth in March alone, and thousands more are on the brink.

Jun 01 02:04 PM

[PastTense:]

Improvement in REITs is just incomprehensible. One of the recent posts I read a few minutes ago said that Starbucks is trying to get rent cuts of 25%. Do the math as to what these kinds of rent cuts do to the relevant REITs.

If anyone want to see what is really happening in real estate follow Calculated Risk:
www.calculatedriskblog.../

Jun 01 02:25 PM

[aja8888:]

"Some might get turned into mini malls......"

We really don't need MORE mini malls (or big malls for that matter). We have empty ones all over Houston now.

Jun 01 02:46 PM

[Roger Knights:]

The sharp leading-sector rotation we're seeing makes me suspicious that the market is being boosted in a sophisticated way, by jacking it up "in detail," to use a military term.

Jun 01 05:16 PM