Digital Realty Trust Inc. (DLR)
(6/11/07)

DLR is a REIT that I think should have one good high left in it, based on the current sentiment trends and wave patterns that have been playing out in the stock.  Ideally, we're looking for a $3-$6 move in the stock as it recovers from a period of selling in May.

The decline in May counts best as the last stage of an expanded flat correction, that appears to have bottomed at 37.59 on May 23.  If correct, the move in the stock to 41.42 on June 4 is the start of Wave (5), which would complete its intermediate degree rally.  42.86 is the nominal high in the stock, which we would expect to be retested, and ideally exceeded.  Upside targets would be at 44.37 and 46.47.  We'd suggest using a break of 41.50, with 39 a suggested stop.

For an option play, the October 2007 $40 Call (symbol DLRJH) is decently priced at $2.65, with the Delta at 0.60.  

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