A long term analysis of Land Securities (LAND.LSE)
Land Securities Group PLC is a real estate investment trust (REIT). It owns, manages and develops offices, shops and housing in the United Kingdom. It is part of Amadalia long term investment portfolio since November of 2011. We use monthly, weekly and daily charts in our analysis covering the trend in a long and medium term basis. With this series of posts we will analyze equities which we believe should be part of a long term investing portfolio. Before we begin the analysis of Land Securities, let's make clear what we really mean by long, medium and short term time frames.
Every trader is unique and has his own style of investing based on his needs, personality, lifestyle and psychological characteristics. A young and active investor for example tends to be more inpatient and courageous, willing to make riskier trades in order to profit in short term time horizon. On the other hand an older investor tends to be more patient and conservative, willing to wait as long as it takes in order to gain stability and security out of his trading strategy. A long term investment strategy usually lasts from several months to several years, a medium term usually lasts from several weeks to several months and a short term investment strategy lasts from several minutes to a couple of days. Because the real estate sector isn't as volatile as other sectors like for example the financial or technology, sometimes it serves as a safe refuge in a bear market or a secure addition to a "retirement portfolio". For the long term trader who wants to build a secure and stable "equity bouquet", the real estate sector can offer him or her some great investment opportunities.
The general psychology in which Land Securities (LAND.LSE) is trading since 2009 is bullish. After the lowest low price level at about £3.23 in March of 2009, the price now recovers and moves higher (see trendline M1, chart 1). On chart 2, we see the rising MACD indicator which supports the upwards price move and gives extra validity to this bullish trend. The first resistance level on monthly chart 1 is at about £8.95 (see resistance M1, chart 1). At these levels the price will probably find resistance, before it continues the upwards move.
The weekly chart3 depicts only the bullish market action since 2009. We can identify the rising channel in which the price is trading (see rising channel, chart 3) and the upper and lower boundaries which act as a resistance and support level respectively. We expect the price to find resistance at £10 - £11 and a strong support at £7.5. With the £10 level as a profit target and the £7.5 as a stop loss, the Reward/Risk ratio of the trade is 1.89/0.61 = 3.1 which is really good.
In order to find the right price level to place our long position, we use the daily chart. On daily chart 4, we can see that the price found resistance at £8.18 level where the resistance D1 is (see chart 4). The first support level is at about £7.80 (see trendline D1, chart 4) and the next one at £7.50 (see support D1, chart 4).
I suggest the investor go long after the price breaks the resistance level D1 at £8.18 upwards, placing a profit target at £10 level and a stop loss at 7.5£. The support level at £7.5 is too important to be broken downwards and a possible bearish breakout, could initiate a trend reversal.