iShares Dow Jones US Real Estate (ETF) (IYR) — In a stock market that is clearly due for a pullback, high-yielding IYR has come to life. Since the February lows, it has outperformed the broader market by 6 percentage points, up 18% compared to the S&P 500’s 12% advance. After breaking out of a narrow, eight-week trading range this week, the fund appears headed higher.
The top 10 holdings in IYR are Simon Property Group Inc (SPG), American Tower Corp (AMT), Public Storage (PSA), Crown Castle International Corp (CCI), Equity Residential (EQR), Weyerhaeuser Co (WY), AvalonBay Communities Inc (AVB), Welltower Inc (HCN), Prologis Inc (PLD) and Equinix Inc (EQIX).
Turning to the chart, IYR has formed a rectangle pattern over the past two months with support at $76 and resistance at $78. Shares broke out of this consolidation formation this week, hitting a new 52-week high just below $79.
The breakout occurred following a deep “V” bottom under $67 in February and a golden cross (50-day moving average crosses up through the 200-day moving average) in April. The MACD indicator also registered a buy signal on Thursday.
Traders should try to buy IYR at $78.50 with a target of $85 for a potential 8% gain. Longer-term buyers can hold this defensive fund for the chance at bigger returns and an attractive yield, which currently sits at more than 4%.