Trade Alert: 2 New Trades — Real Estate and Computer Tech Prime Seasons

As I mentioned on Monday, I’m following several possible trades, simply waiting for an ideal entry point.

Well, today is the day to enter two of our prime seasons: real estate and semiconductors.

I’ll start with the real estate prime season. This is a bonus trade. (For more about bonus trades, please refer to No. 13 in my FAQ here.)

This prime season lasts from November 20 through May 5, so we’re entering it a little early, but for good reason.

The stock our system has identified to give us the best chance at a solid gain is already breaking out, and that means it’s time to jump on this trend.

Last year, we traded the GEO Group, and it handed us a solid 42% gain on the entire position over the time period.

This year, we’re buying Pennsylvania Real Estate Investment Trust (NYSE: PEI).

PREIT, as it is known, is a real estate investment trust (REIT) with 23 million square feet of retail and lifestyle properties. Its properties are located mostly in the Eastern U.S.

I know many people are concerned about the retail sector — particularly with malls surviving the changes the sector is facing.

But I’m a firm believer that the mall isn’t dying; it’s just changing. Malls are finding new tenants to replace previous big-box chains like Sears. Even if they’re adding trampoline parks or more high-end retailers, the malls are adapting.

I, for one, can say that my family and I still go to malls. We buy our kids’ shoes and clothes at the mall. Before my wife buys a new purse, she likes to see and hold it first.

Shopping in the store won’t ever completely die, and malls are going to adapt to bring in the foot traffic — which already seems to be holding steady.

Every time I’m at a mall, it’s packed — so much so that I hate going.

Parking is a mess, the lines in the stores seem to take forever … but we still go to malls regularly. It seems they’re doing something right.

Besides, our trade today is just for a few months — not for 10 years.

I definitely have confidence in mall operators for that long, and I think they’re trading at bargain prices.

We’ll capitalize on that today.

This will count as a bonus trade since it’s not part of our core Rolling and Stacking Calendar — but it’s still a consistent prime season. Out of the 10 years back tested, it only had one losing year: 8% in 2011 to 2012. The average return for the sector was 31%.

Here’s your action to take:

Bonus Trade — Action to Take
Stock/ETF: Pennsylvania Real Estate Investment Trust
Ticker: NYSE: PEI
Action: Buy to Open
Buy-up-to Price: $11.50

At last glance, it was trading at $11.42.

Now let’s talk about our semiconductor trade.

Action to Take: The Semiconductor Prime Season

I told you on Monday that the No. 1 pick from this sector based on my ranking system was Advanced Micro Devices (Nasdaq: AMD) — but we already own that one. It was also the stock the system picked for the computer technology prime season. (By the way, AMD is still trading below my buy-up-to price, and the computer tech prime season lasts until March 29. So if you haven’t bought it for any reason, it isn’t too late.)

To benefit from the semiconductor prime season, we’re going to add another semiconductor stock — Micron Technology (Nasdaq: MU).

This was the runner-up based on my ranking, and it’s a familiar stock to our service. We traded it last year for the semiconductor prime season, and it handed us a 20% gain in just two months.

Micron Technology manufactures memory and storage devices for various electronic products.

Micron came up in our back test once — in 2011. We closed it for a 50% profit that year.

Overall, the semiconductor prime season has generated an average gain of 17%, and there were only three losing years out of the 10 we tested. Two of those were 2008 and 2009.

Keep in mind: These years refer to when we closed a trade. So we closed the stock in February of 2008 and February of 2009 for losses in the prime season. Of course, those losses were offset by gains we made from other seasonal trends during those years.

This prime season is from our core Rolling and Stacking Calendar, so we’ll be rolling our 2.97% loss from the inverse health care prime season into this trade. If you didn’t place the inverse health care trade, don’t worry: You can simply start a new rolling and stacking position with this trade.

Here’s your action to take:

Action to Take
Stock/ETF: Micron Technology
Ticker: Nasdaq: MU
Action: Buy to Open
Buy-up-to Price: $46.50

At last glance, it was trading at $46.05.

That’s all for today. I still have several trades I’m watching, which we could enter in the next few weeks. I’ll alert you when there’s an action to take. In the meantime, you can sign up for my Automatic Profits Alert text messages here. You’ll get a brief alert on your cellphone any time I issue an action to take.

I’ll be back tomorrow with our mailbag issue. If you have any questions or concerns to share, just write to


Chad Shoop, CMT
Editor, Automatic Profits Alert