Estate Agent stocks: Still well appointed?

It would appear that the old cliché of the Gold Rush is also pertinent in terms of the housing market. Those who are involved in the ‘picks ‘n’ shovels’ look to be flourishing.

Perhaps it may be argued that the likes of Savills (SVS) or Rightmove (RMV) will actually be less risky when or if the real-estate game of musical chairs stops. Perhaps best of all, as most of us will be aware, estate agents are relatively lightly regulated compared to many other finance related areas. This is especially so given the sums of money involved, and the way that people can be left high and dry now and again, even though historically property prices have tended to rise and let the greedy/foolish off the hook. Indeed, if there is a rise in interest rates from present levels, even by a percentage point or two, this could get rather painful.

Luckily, looking at the daily chart of Savills, the upmarket London estate agent, with equally upmarket operatives, it can be said that thoughts of any topping out of the share price here would appear to be rather fanciful. This is because the stock has remained within a rising trend channel from October. The floor of the channel currently runs at 712p, and this is the suggested end of day close stop loss on the buy argument. But there is more. The January gap to the upside through the initial resistance of that month was an ultra bullish flourish. At least while the top of the gap remains unbroken one would regard the top of the October channel at 800p as being the minimum target on the upside. The timeframe on such a move is seen as being as soon as the end of April.

The market may be upbeat as to the charting prospects for Savills, but it would appear that at Foxtons (FOXT), its second stock market manifestation, has been as choppy as the aftermath of the first crash in 2007. For instance, bears from hedge funds downwards have been giving this stock a beating from early last year, effectively halving the value of the company. The present position is not one for the optimists to savour in the sense it would appear a new leg to the downside is imminent. This is because even though the shares rallied appreciably from the sub 150p zone, they were unable to clear the 200 day moving average now at 217p. Space below the 200 day line even on a strong countermove rally tends to be a reliable bearish sign. The likelihood now is that at least while below the 20 day moving average at 203p, a partial or even full retest of the 150p zone should be on the cards. Cautious shorters would wait on an end of day close back below the 50 day moving average at 188p, even though the past couple of sessions have witnessed quite severe looking hanging man daily candles.

Finally, I am taking a charting look at relative stock market newcomer, Zoopla (ZPLA). What is interesting here is the possibility of a triple bottom on the daily chart in place since November. Of special interest is the way that Friday’s daily candle was an especially long one from 159p at the floor, with the stock finishing just shy of the high of the day. This should bring with it some decent upward momentum over the next few sessions, especially when backed by the double RSI bounce below 40. On this basis it may be worth targeting a late January resistance target over 190p during April, while there is no end of day close back below Friday’s floor.