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Jeff Saut: Two Real Estate Stocks to Consider Now


For now, investors are sitting tight, but there are some bright spots in this markets.

Wall Street returned from its long weekend yesterday, although many traders and investors may have only shown up in spirit. It was a quiet day in the markets, with a very tight range in the S&P 500 (INDEXSP:.INX) and lower-than-average volume. This was not too surprising given the S&P's current position. It remains in no-man's-land between 1813 and 1851, and only a move out of this channel will tell us much about the market's future trading direction.

However, in what should be viewed as a positive sign, the Nasdaq Composite Index (INDEXNASDAQ:.IXIC), which marginally broke out to both a new trading and closing high on Friday, followed through on this breakout Tuesday. The coming days should now bring confirmation as to whether or not the S&P and other fellow indices will follow the Nasdaq's lead. While we wait, let's take a look at some other notable markets.

Gold and silver have been mentioned a few times in my morning articles over the past couple of months, and the precious metals continue to outperform equities so far in 2014.

When looking at their spot prices, both closed over their 200-day simple moving averages yesterday for the first time since February of last year, which should even catch the eyes of those who have been neglecting the shiny stuff during its prolonged decline.

It would not be surprising to see gold and silver now trade around these 200-day SMAs to catch their collective breath, especially given the quick run-up from the bottom.

Additionally, the US Dollar Index appears to be nearing support at a multiyear trend line. As gold/silver are both priced in dollars and the asset classes tend to move inversely to each other, strength in the dollar over the coming weeks could lead to some negative pressure on the metals. How the dollar reacts to this multiyear trend line is certainly something to watch closely given the important role the currency plays in world markets.

Finally, companies tied to US real estate may be worth adding to your watch list after the iShares Dow Jones US Real Estate Index Fund (NYSEARCA:IYR) broke out of a multimonth triangle pattern to the upside last week.

Two such companies that are both Strong Buy-rated by our fundamental analysts and also happen to be in IYR's top-10 holdings are American Tower Corporation (NYSE:AMT) and Weyerhaeuser Co. (NYSE:WY). Both of these stocks appear to be nearing short-term resistance levels, but consider buying any pullback as long as the companies remain Strong Buy-rated.
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No positions in stocks mentioned.
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