Digital Realty Trust, Inc., a real estate investment trust (REIT), through its controlling interest in Digital Realty Trust, L.P., engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. It focuses on strategically located properties containing applications and operations critical to the day-to-day operations of technology industry tenants and corporate enterprise datacenter users, including the information technology departments of Fortune 1000 companies, and financial services companies.
Take a look at the 1-year chart of Digital (NYSE: DLR) with the added notations:
Over the past year, DLR has been trending consistently higher. During the most recent 3 months, the stock has formed a key support level at $100 (red) and a downtrending resistance line (blue). At some point, one of those two levels had to break. Now that the $100 level has been broken, DLR should be taking another step lower.
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The Tale of the Tape: DLR broke a key level of support at $100. A trader could enter a short position on any rallies up to or near $100 with a stop placed above the level. If the stock were to break back above the $100 level, a long position might be entered instead.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach