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Annaly Capital (NYSE: NLY) stock price has erased all gains made earlier this year as hopes of a Fed rate cut fall and as mortgage rates rise. It rallied from a low of $17.68 after its fourth-quarter earnings and jumped to over $19.73 in March. It has now erased most of those gains and has fallen by over 7.22% from its highest level this year.
Annaly Capital Management earnings ahead
Annaly Capital’s shares have dropped by over 5% this year but they remain above 34% from their lowest level in 2023. It has become one of the best-performing REITs in the industry. Still, as an investment, the company has continued to underperform the likes of S&P 500 and Nasdaq 100 indices.
The next important news to watch will be the upcoming Annaly Capital’s financial results scheduled for Wednesday. Analysts expect the figures to show that the company’s results to show that its revenues rose to $157 million in the fourth quarter.
The most recent financial results showed that Annaly’s total portfolio rose to over $74.3 billion. Most of these funds were in its highly liquid agency portfolio. The residential credit portfolio rose by about 9% to $5.7 billion.
For starters, Annaly Capital is one of the biggest REITs in the financial results. The company operates three key businesses: agency group, residential credit, and mortgage servicing rights group.
Its agency group, the biggest part of the company, invests in mortgage-backed securities (MBS) by residential mortgages that are guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. It has over $65.7 billion in assets.
The residential credit group has over $5.7 billion in assets and invests in non-agency residential mortgage assets. Finally, the mortgage servicing rights invest in assets that provide the right to service residential loans in exchange for a portion of interest payments.
Annaly Capital is one of the highest-yielding companies in Wall Street. It has a forward dividend yield of about 14.18%. Despite this yield, the company has constantly underperformed the broader market.
Annaly’s total returns in the past five years stood at minus 14.3% compared to the S&P 500’s 70%. The same trend is happening this year as the stock has dropped by over 2% while the S&P 500 has jumped by over 5%.
Annaly Capital stock price forecast
The daily chart shows that the NLY share price has dropped sharply in the past few weeks. It moved from a high of $19.80 to a low of $17.68. A closer look shows that the stock has moved below the 50-day and 100-day Exponential Moving Averages (EMA).
A closer look shows that the stock has formed a double-bottom pattern at $17.68 whose neckline is at $19.71. In most periods, this pattern is one of the most popular bullish signs. At the same time, the stock has formed an inverse head and shoulders pattern.
Therefore, from a technical perspective, there is a likelihood that the stock will rebound after earnings. If this happens, the key level to watch will be at $19.
However, be on the lookout for the key support at $17.68. A break below that support will point to more downside in the near term. If this happens, the next point to watch will be at $17.
The post Annaly stock price forms 2 bullish patterns ahead of earnings appeared first on Invezz
