My bias is still bullish for the fourth quarter but stocks do look vulnerable to more selling pressure here. We're going to take advantage of the weakness with this office REIT that has been underperforming.
NEW BEARISH Plays
Corporate Office Properties - OFC - close: 34.94 change: -0.99
Stop Loss: 37.05
Target(s): 32.25, 30.25
Current Gain/Loss: +0.0%
Time Frame: 6 to 8 weeks
New Positions: Yes
Corporate Office Properties Trust (COPT) (NYSE:OFC - News) is a specialty office real estate investment trust (REIT) that focuses on strategic customer relationships and specialized tenant requirements in the U.S. Government, Defense Information Technology and Data sectors. The Company acquires, develops, manages and leases office and data center properties which are typically concentrated in large office parks primarily located adjacent to government demand drivers and/or in growth corridors. As of September 30, 2010, the Company owned 269 office properties totaling 21.0 million rentable square feet, which includes 20 properties totaling 1.1 million square feet held through joint ventures. The Companyâ€™s portfolio primarily consists of technically sophisticated buildings in visually appealing settings that are environmentally sensitive, sustainable and meet unique customer requirements.
(source: company press release or website)
Why We Like It:
OFC has not participated in the market's rally. When the company reported earnings in late October investors were unhappy with the results. Given the
lackluster economy and high vacancy rates for businesses this stock could suffer for a while. Traders are obviously not expecting a big fourth quarter or 2011 rebound with shares of OFC poised to breakdown from a huge bearish consolidation.
I am suggesting bearish positions now. If you want to readers can try and time their entry point on a bounce back toward $35.75 or a new relative low under $34.50 as alternative entry points. Our first target is $32.25. Our second target is $30.25. FYI: The P&F chart is currently bearish with a $29 target.
Suggested Position: Short OFC stock @ current levels
Entry on November 10 at $xx.xx
Earnings Date 02/09/11 (unconfirmed)
Average Daily Volume: 1.0 million
Listed on November 9th, 2010