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October 23, 2013  Wed 4:45 AM CT

XLU: SEE CHART GET CHAIN FIND STRATEGIES
September's weak payrolls report has investors turning to utilities and real-estate investment trusts.

optionMONSTER's Heat Seeker monitoring program detected the purchase of more than 48,000 November 39 calls in the SPDR Utilities Select Sector Fund, most of which priced for $0.33. Later in the session, 10,000 December 69 calls were bought in the iShares U.S. Real Estate ETF, mostly for $0.83.

Both ETFs track broad sectors that are valued for their dividends and cash flows rather than growth. They fell sharply between May and September as higher interest rates decreased the appeal of their payouts, but now that trend is reversing.

Yesterday's catalyst was a report from the Labor Department that only 148,000 jobs were added in the United States last month, well below the 183,000 estimate. That suggests the economy was slowing even before the recent government shutdown, and further reduces the likelihood of the Federal Reserve tightening monetary policy later this year.

The U.S. dollar also fell to its lowest level in almost two years, while gold and silver rallied.

XLU rose 1.28 percent to $38.84 and IYR climbed 1.06 percent to $67.43. That was better than the S&P 500's 0.57 percent gain in the session. Over the last six months, however, both funds have significantly underperformed the broader market.

Total option volume was 9 times the daily average in XLU and twice normal amounts in IYR. Calls outnumbered puts by more than 2 to 1 in both funds, which shows the bullish sentiment.
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