2 Real Estate Stocks Primed For Post-Christmas Punishment

AGNC Investment Corp (NASDAQ:AGNC) and Realty Income Corp (NYSE:O) have historically struggled in the week between Christmas and New Year's

Dec 20, 2016 at 2:26 PM
facebook X logo linkedin


Earlier, we took a look at 30 stocks that could crumble after Christmas. One group that was notably overrepresented was real estate stocks. Specifically, one in every six post-Christmas underperformers belonged to the sector -- or five total. Below, we'll highlight two of the five -- AGNC Investment Corp (NASDAQ:AGNC) and Realty Income Corp (NYSE:O) -- explaining why any losses could potentially be compounded.

Looking at the week between Christmas and New Year's over the past eight years, AGNC has had only one positive return. On average, the stock has lost 2.9% during the week. This isn't encouraging, considering the stock has only gained about 4% in 2016 at $18.06. In short, an especially poor post-Christmas week could push the shares into negative year-to-date territory.

If this happens, AGNC could get punished as optimism in the options pits begins to unwind. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly twice as many calls as puts. The resultant call/put volume ratio of 1.93 sits in the top quartile of its annual range, hinting at a pronounced preference for bullish bets over bearish.

In addition, a bad close to 2016 could provoke even more short selling on AGNC Investment Corp. Over the last two reporting periods, short interest exploded by nearly 53%. Yet, less than 3% of the stock's float is dedicated to these bearish bets, leaving plenty of room for additional shorting activity.

As with its sector peer, O has historically struggled in the last week of the year. During the previous decade, the shares have finished higher only twice during that time frame, while their average return is a loss of 1.8%. In other words, the stock could soon see its year-to-date lead of 9.5%, at $56.55, get dented.

Should this transpire, an exodus among option bulls could exacerbate Realty Income Corp's struggles. After all, during the past two weeks, the stock has racked up a 10-day ISE/CBOE/PHLX call/put volume ratio of 2.34 -- just 13 percentage points from a 12-month high. From a contrarian perspective, this makes for a bearish setup on O shares.

Let us help you profit from market volatility. Target big gains in short order with a 30-day trial of Schaeffer's Weekly Volatility Trader!

 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI