Monday, August 16, 2010

NLY Watch

Dividend play Annaly Capital Management Inc. (NLY) has whipsawed into bear phase on a major signal after three days on the bull side of the fence. Hey, I own this baby. What, me worry?

NLY $17.31

Person's Proprietary Signal (pps) turned bearish after a 2.5% decline on Fridday brought the price below the 20-day simple moving average. The macd has been in bear territory since July 27. The fast stochastic signaled bear on Friday. The parabolic sar alone remained in bull phase.

NLY, as a real estate investment trust with a 15.68% dividend yield, is sensitive to bond yields in the broader markets. With long-term treasury yields reaching levels not seen since the spring of 2009, it is no surprise that NLY is showing some shakiness.

The preceding, three-day bull phase resulted in a 0.1% decline, so it was pretty much of a wash.

On the Person's chart, NLY is trading below the midline but well above the lower pivot.

Person's Table
ppspps openupper pivotlower pivot
NLY $17.31 $17.46 aug16 $17.76 +2.6% $17.16 -0.9%

The signal leaves NLY well within the sideways range that has (pretty much) contained its price movements this summer. The high is $18.37, and the low is $16.84, but most of the time $18 and $17.25 have marked the bounds. NLY is trading well above the 200-day exponential moving average.

Reversal Levels
  • $18.37, +6.1% (3-mo high)
  • $18.00, +4.0%
  • $17.62, +1.8% (20-day ma)
  • $17.25, +0.4%
  • $ <== You are here.
  • $16.84, -2.7% (3-mo low)
  • $16.72, -3.4% (200-day ma)
Bottom line: I like NLY as a dividend play, and I own shares. For a high-yield dividend stock like NLY, I tend to be less hair-trigger about my exits, because I don't want transaction fees to eat up my dividend profits. So I'll get nervous and may begin to exit if NLY dips below the 200-day exponential moving average. Otherwise, I'll tend to stay put. Disclaimer
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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