This morning, I am recommending a bullish trade on Duke Realty Corporation (NYSE:DRE), the industrial and medical office real estate investment trust (REIT).
My indicators are giving neutral-to-bearish readings this week, a downgrade from last Friday’s bullish-to-neutral readings. But as we move into October, the bulls might get some help from fund managers, who typically put new money to work at the start of a new month.
REITs, with their high dividends, are an appealing choice in this market, and one particular trading practice may help push stocks like DRE even higher.
Window Dressing
At this time of year, big fund managers may start to do some “window dressing,” which we can use to our advantage.
Window dressing your portfolio is something fund managers do to make it seem like their fund is performing better than it actually is. Around this time of year, they may sell their losing stock positions and at the same time buy stocks of companies that have done really well over the past year. To their clients, it makes it look like they’ve been holding the winners all along.
But what this means for us and the market is that we are likely to see the stocks that have done well this year continue to do well, while the stocks that have been the weakest are likely to stay weak heading into the end of the year.
That means that technology, real estate and utilities stocks should outperform. If we turn to DRE’s charts, we can see the stock makes a compelling case for itself as a target for some of this bullish buying.
Climbing Higher Since December 2018
A quick look at the daily chart for DRE reveals an obvious uptrend. After recovering from the massive drop that hit all stocks in December 2018, DRE kept pushing steadily higher.
Daily Chart of Duke Realty Corporation (DRE) — Chart Source: TradingView
We’re counting on that long-term uptrend to create demand for the stock. That way we can collect profits on a bullish call option. And DRE doesn’t need to move far to put these options in the money. I’m recommending options with a $35 strike, which is close to DRE’s close yesterday.
Buy to open the Duke Realty Corporation (DRE) Nov. 15th $35 Calls (DRE191115C00035000) at $0.55 or lower.
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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.
