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ELLIOTT WAVE


Looking At Allied Properties REIT

01/08/13 01:09:58 PM
by Koos van der Merwe

When in doubt, stay out, or as is done in today's uncertain market, buy interest-bearing stocks.

Security:   AP.UN-T
Position:   Accumulate

Allied Properties REIT is a developer of urban office environments. Their objective is to provide stable cash distributions to share owners. But isn't that the aim of all companies established to pay yield to owners of their shares? Of course, the success of the company depends very much on the economy -- will the REIT find tenants to fill the offices they are reconditioning and improving, with tenants prepared to pay the increasing rental?

FIGURE 1: ALLIED PROPERTIES, WEEKLY
Graphic provided by: AdvancedGET.
 
Figure 1 is a weekly chart and shows how the share price rose from a low of $9.76 in November 2008 to its present level of $33.40. Price has moved consistently between its trendlines, and with the price hugging the upper resistance line, and the relative strength index (RSI) suggesting weakness, we could stand aside and wait for lower levels before buying.

FIGURE 2: ALLIED PROPERTIES, DAILY
Graphic provided by: AdvancedGET.
 
Figure 2 is a daily chart of Allied Properties REIT. The chart shows the descending triangle that formed with a breakout on December 5. The JM internal band also gave a buy signal on that date. The JM internal band is a 15-period simple moving average offset by 2% positive and 2% negative.

The descending triangle formation is a formation with a horizontal lower boundary and a downsloping upper boundary. This formation occurs when there is a certain amount of demand at a fixed price, yet supply continues to come into the market. Eventually, demand is exhausted, and prices break down. Demand exceeded supply, and the price broke upward. An Elliott wave count is suggesting that at $33.32, the fifth wave is complete, however, and the possibility of a rise to $34.95 is also a possibility, strengthened by the failure of the descending triangle. The RSI itself is uncertain as to direction.

I would be a buyer of Allied Properties REIT on any correction. Collecting interest on a monthly basis is comfortable.




Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address: petroosp@gmail.com

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