The real estate investment trust based in Memphis, Tennessee that invests in apartments in the Southeastern United States and the Southwestern United States, Mid-America Apartment Communities Inc. (NYSE: MAA) seems to be poised for a decline in its price in the near term as per its latest charts.
Bearish Indications
#1 Channel Breakdown: The daily chart shows that MAA has recently broken down from an uptrend channel that was formed during the past few months. This is a bearish sign. The channel is marked in purple color lines in the daily chart. Once a stock breaks down from a channel, it typically moves lower in the near-term.
Daily Chart – MAA
#2 Price below MA: The stock price is currently below its 50-day as SMA. This is a possible bearish sign.
[hana-code-insert name=’adsense-article’ /]#3 MACD below signal line: The MACD line (blue color) is currently below the MACD signal line (orange color), indicating bearishness.
#4 %K below %D in Stochastic: The %K line is currently below the %D line in stochastic of the daily chart.
This indicates possible bearishness.
#5 Below previous pivot low: The daily chart shows that the stock is currently below the previous pivot low.
This is marked as an orange ellipse in the daily chart.
This area also acts as a strong resistance level. This is a possible bearish sign.
#6 Bearish Aroon: The Aroon indicator shows bearishness as the Aroon up is below 30 and the Aroon down is above 70.
#7 Near Supply Area: The weekly chart shows that the stock is currently near a supply area. This area is marked as a purple rectangle. Despite multiple attempts, the stock has not been able to cross above this level. Such a level would then typically start to act as a strong resistance level. So, this seems like a good level for the stock to correct. This is a bearish sign.
Weekly Chart – MAA
#8 MACD below signal line: The MACD line (blue color) has currently crossed below the MACD signal line (orange color) in the weekly chart, indicating possible bearishness.
Recommended Trade (based on the charts)
Sell Levels: If you want to get in on this trade, you can take short positions on MAA below yesterday’s close. This translates to a price below $128.
TP: Our target prices are $121 and $110 in the next 3-6 months.
SL: To limit risk, place a stop loss at $132.70. Note that this stop loss is on a closing basis.
Our target potential downside is 6% to 12% in the next 3-6 months.
For a risk of $4.70, our target rewards are $7.00 and $13.20. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers nearly 2x to 4x rewards compared to the risks.
Risks to Consider
The stock may reverse its overall trend if it breaks upwards from the channel with high volume. The breakout of the stock could also be triggered in case of any positive news, overall strength in the market, or any regulatory changes in its sector.
Happy Trading!
Tara
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