Tuesday, July 27, 2010

NLY Watch

The real-estate investment trust Annaly Capital Management Inc. (NLY) has moved to bull phase on the parabolic sar and the macd, confirming a signal four days earlier by Person's Proprietary Signal. Earnings are scheduled for release Thursday after the markets close.

NLY $17.94

NLY is primarily a quarterly dividend play, with an annualized yield in excess of 15%. It next goes ex-dividend near the end of September.

I'm not normally a buy-and-hold player. But my time horizon for NLY is longer than with most stocks, in part because of the high dividend (I don't want to see it eaten up by transaction fees) and in part because I think real-estate is and will continue to be recovering.

So my sell signal for NLY is a cross below the 200-day moving average, which stands at $16.99, or 5.6% below the current price.

The stock is not one for clear trends, neither on the three-month chart, where it has run essentially sideways between $17 and $18 since late May, nor on the very long term chart, where it has been zigging and zagging between about $11 and $21 since 2002 or so.

On the Person's chart, NLY is trading between midline and the upper pivot and has been there since May. A drop below the midline would be a potential sell signal, and below the lower pivot a strong sell signal.

Person's Table
ppspps openupper pivotlower pivot
$17.94 $17.72 jul22 $18.62 +3.8% $16.63 -7.3%

The most recent swing low of $17.37 is above the midline, and a break below that level would also be a strong trouble-ahead signal.

Reversal Levels
  • $18.37, +2.4%
  • $18.25, +1.7%
  • $17.94 <== You are here.
  • $17.37, -3.2%
Bottom line: For my portfolio, I like NLY as a hold at this point, but I wouldn't buy until I saw a drop in price or until it is closer to the ex-div so as to capture the next dividend with less capital risk.

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Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.

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