The real estate sector has seen significant underperformance as we approach a new year, finishing last among the 11 S & P 500 sectors in percentage terms. The relative weakness has made select REITs attractive candidates for outperformance in 2026 following the struggles of 2025. One REIT that stands out from a technical perspective is AvalonBay Communities, Inc. (AVB) , which appears poised for an oversold bounce in both relative and absolute terms. A short-term breakout has unfolded above resistance at the April low and daily cloud (~$183), suggesting upside follow-through in the new year. The breakout reflects improving intermediate-term momentum and supports a move toward resistance near $195 — where a 38.2% Fibonacci retracement level intersects with the 200-day moving average (MA). From a long-term perspective, AVB is oversold per the monthly stochastics, a condition reinforced by a minor counter-trend signal from the DeMARK Indicators®. Historically, this type of signal has marked key turning points for the REIT within its secular uptrend channel. The oversold upturn would be confirmed with upside follow-through from the recent breakout, supporting a more decisive turnaround in 2026. Relative to the S & P 500 Index (SPX), AVB has been in a year-to-date downtrend, reflecting the broader REIT sector’s underperformance. More recently, relative action has begun to stabilize and is taking the form of a potential double bottom. This setup suggests a possible oversold bounce on a relative basis, aligning with the improving price action. Versus the 200-day MA, the AVB/SPX ratio sits at least 20% below its own 200-day MA, an oversold extreme last seen in 2020 and 2009. Both prior instances were followed by relative relief rallies, furthering the case for potential outperformance from AVB in 2026. —Katie Stockton Access research from Fairlead Strategies for free here . 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