The real estate sector could struggle in the short term
It's been a rough, volatile month for stocks, with the S&P 500 down 9.4% so far in October -- set for its worst month since February 2009. While these 25 stocks could rebound in November, several real estate stocks could decline next month, if past is prologue. The iShares U.S. Real Estate ETF (IYR) tends to struggle in November, as do holdings Duke Realty Corp (NYSE:DRE) and Kimco Realty Corp (NYSE:KIM) -- the latter of which is flashing additional sell signals.
The IYR has averaged a November loss of 2.22%, and has ended the month higher just 30% of the time in the past 10 years -- making it among the worst exchange-traded funds (ETFs) to own in November, historically. Meanwhile, Duke Realty stock has been the worst S&P 500 member to own in November, ending the month higher just 10% of the time, and averaging a steep monthly loss of 7.65%, per data from Schaeffer's Senior Quantitative Analyst Rocky White. Kimco shares aren't far behind, ending November higher just 20% of the time, with an average loss of 6.07%.
DRE Stock Could Reverse to 7-Month Lows
DRE has been in a channel of lower highs since peaking at a 10-year high of $29.48 in early August. The shares recently rebounded after earnings on Oct. 24, but backed down from resistance at that trendline connecting lower highs. At the equity's current perch of $28.04, another 7.65% slide next month would put Duke Realty shares around $25.89 -- in territory not charted since April.
Should the security extend its trend of weak Novembers, the real estate investment trust (REIT) could be vulnerable to analyst downgrades. Currently, five of 11 analysts following DRE maintain "buy" or better opinions, with not a "sell" rating in sight. Likewise, the consensus 12-month price target of $30.36 sits in territory not charted since 2008, leaving the door open for potential price-target cuts to exacerbate seasonal headwinds.
KIM Stock Sending Up Sell Signals
Kimco Realty stock also moved higher after earnings last week. However, the shares are now within one standard deviation of their 40-day and 80-day moving averages, after a lengthy stretch below these trendlines. In the past, run-ups to these moving averages have been sell signals for KIM stock.
Specifically, there have been 12 other times where KIM came within striking distance of its 40-day trendline, after which the shares went on to average a one-month loss of 5.87%, and were higher just 8% of the time. Likewise, after the last three run-ups to the 80-day moving average, KIM shares were higher just once one month later, with an average loss of 4.92%. Meanwhile, the overhead $16.40-$16.50 area could act as additional resistance, after providing support for the stock earlier this year.
