Focusing the Lens on Empire State Realty Trust Inc (ESRT) Shares: Technical Update

Empire State Realty Trust Inc (ESRT) will be on trader’s radar at the beginning of the upcoming session as the closing price ticked above the Parabolic SAR indicator (PSAR). The PSAR, Developed by Welles Wilder, is designed to determine the point in time when there emerges a better than average probability of a trend switching directions.  This is a common tool used by traders and investors to try to gauge potential reversal of a trend.

 The parabolic SAR is shown on the charts as a series of small ‘dots’ that are placed either above or below the price. When the price is trending to the upside, the dots are below the price action and when the price is trending to the downside, the dots are above the price action.  The basic use of the Parabolic SAR is to buy when the dots move below the price bars (signaling an uptrend) and sell/short-sell when the dots move above the price bars (signaling a downtrend).

There are plenty of different types of stocks that investors have to choose from. Some will opt to be more aggressive with their portfolios while others will choose to play it a bit safer. Blue chip stocks include companies that typically have a high market cap and have been profitable over a long period of time. Growth stocks are typically expected to have a high P/E ratio and a low dividend yield. The idea is that a growth stock will continue to expand and grow into the future. Many investors will be searching for value stocks. Value stocks are typically cyclical in nature and investors may be looking to buy and hold these types rather than try to squeeze out some short-term profits.

Active traders have a wide range of technical indicators at their disposal for when completing technical stock analysis. Currently, the 14-day ATR for Empire State Realty Trust Inc (ESRT) is spotted at 0.26. First developed by J. Welles Wilder, the ATR may assist traders in determining if there is heightened interest in a trend, or if extreme levels may be signaling a reversal. Simply put, the ATR determines the volatility of a security over a given period of time, or the tendency of the security to move one direction or another.

Checking in on some other technical levels, the 14-day RSI is currently at 57.89, the 7-day stands at 68.52, and the 3-day is sitting at 88.89. The RSI, or Relative Strength Index, is a commonly used technical momentum indicator that compares price movement over time. The RSI was created by J. Welles Wilder who was striving to measure whether or not a stock was overbought or oversold. The RSI may be useful for spotting abnormal price activity and volatility. The RSI oscillates on a scale from 0 to 100. The normal reading of a stock will fall in the range of 30 to 70. A reading over 70 would indicate that the stock is overbought, and possibly overvalued. A reading under 30 may indicate that the stock is oversold, and possibly undervalued.

Another technical indicator that may be a powerful resource for determining trend strength is the Average Directional Index or ADX. The ADX was introduced by J. Welles Wilder in the late 1970’s and it has stood the test of time. The ADX is typically used in conjunction with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to help spot trend direction as well as trend strength. At the time of writing, the 14-day ADX for Empire State Realty Trust Inc (ESRT) is noted at 23.09. Many technical analysts believe that an ADX value over 25 would suggest a strong trend. A reading under 20 would indicate no trend, and a reading from 20-25 would suggest that there is no clear trend signal.

The Williams Percent Range or Williams %R is another technical indicator worth taking a look at. Empire State Realty Trust Inc (ESRT) currently has a 14 day Williams %R of -5.71. The Williams %R fluctuates between 0 and -100 measuring whether a security is overbought or oversold. The Williams %R is similar to the Stochastic Oscillator except it is plotted upside-down. Levels above -20 may indicate the stock may be considered is overbought. If the indicator travels under -80, this may signal that the stock is oversold. Chart analysts may also use the indicator to project possible price reversals and to define trends.

Empire State Realty Trust Inc (ESRT) currently has a 14-day Commodity Channel Index (CCI) of 116.92. Active investors may choose to use this technical indicator as a stock evaluation tool. Used as a coincident indicator, the CCI reading above +100 would reflect strong price action which may signal an uptrend. On the flip side, a reading below -100 may signal a downtrend reflecting weak price action. Using the CCI as a leading indicator, technical analysts may use a +100 reading as an overbought signal and a -100 reading as an oversold indicator, suggesting a trend reversal.

As we close in on the end of the calendar year, investors may be trying to visualize potential trades for the New Year. There are many professionals that believe that there is still plenty of room for stocks to run even at current levels. Preparing the game plan for the next few quarters may give the investor some new ideas. Staying focused and maintaining discipline may help guide the investor to unchartered territory in the coming months. Tracking market events from multiple angles may also help provide some enhanced perspective.  

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