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Avoiding the Market Swings of Summertime Softness

By  +Follow August 22, 2013 3:19PM
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As Wall Street intensifies its watchful eye over the Federal Reserves bond-purchasing strategy, the market will likely be more susceptible to reactionary movements. How should traders and investors handle this kind of market? We asked Toni Turner of TrendStar Trading Group in this week's interview.

EQ: With earnings season over, Fed Watch is back in full swing again. What were your thoughts on the most recent FOMC minutes and the eventual tapering?

Turner: It was a wild ride in the market after the FOMC minutes came out. The S&P 500 and other indices were shot  higher but then plunged lower toward the close. The minutes stated that the committee will moderate the pace of its security purchase later this year. It went on to say that if economic conditions improve, that the committee will gradually reduce the pace and conclude its purchase in mid-2014. Of course there was a lot more content, but that sums up most of what concerns the market.

Naturally, the journey from where we are right now to undergoing this process is going to change almost everything, because it’s going to change interest rates. As we’ve discussed before, interest rates represent the cost of money and the cost of doing business. That’s a dynamic that rules much of the world. I don’t think this transition is necessarily going to be easy, especially considering the added headwinds including the upcoming debt ceiling limit and other policy making issues that will arise when Congress returns from vacation. I think we may have a bit of a rocky road ahead here, but we’ve certainly had a lot of warning and I think we need to be tactical in our decisions right now.

EQ: One particular industry that is especially rate sensitive is real estate investment trusts. Is this an area you’re looking at for potential plays?

Turner: Ironically, bonds are so oversold right now that they could potentially bounce, and sooner than later. If that happens, we’re looking at REITs and the iShares Dow Jones US Real Estate ($IYR), and it shows that at least there is a tradable bottom here. So we’re looking to capitalize here on a bounce. Certainly, the yields that they are paying now aresubstantial, some above 5-percent, , and if they get an oversold bounce here, we’re looking at BioMed Realty Trust Inc. (BMR) , Duke Realty Corp. (DRE) , and Camden Property Trust (CPT) . Of course, there are many more REITs people can check out.

Now, anyone that gets into these has to put enter what I call a “no kidding around” protective stop, meaning a hard stop with their broker. If you don’t want to do that, then I would suggest not entering this trade. We’re looking to trade for a short-term bounce, and by that, I mean within just a couple of days, for a quick opportunity. There is risk involved, , so the stop is very important.

EQ: There have been some murmurings about the Hindenburg Omen. Is this an indicator you pay attention to?

Turner: It’s one of the things that I pay attention to. Of course, the Hindenburg Omen was named after the 1937 disaster of a German passenger airship that exploded. The Hindenburg Omen is the combination of technical analysis and trading signs. One of its components is based on Norman Fosback's High Low Logic Index. Basically, the indicator lights up when:

  • New 52-week highs and 52-week lows are equal or greater to 2.8 percent on the New York Stock Exchange,
  • The NYSE index is greater in value than it was 50 trading days ago,
  • The McClellan Oscillator is negative on the same day

When all these signals converge, it indicates that we could have a severe meltdown in the market. It hasn’t always been right—I don’t know of an indicator that has been—but it has predicted the 2007 financial meltdown and the 2000 tech bubble burst. So there are times when it has been right.

Now, while I certainly do pay attention to these kinds of indicators, I tend to just keep them at my elbow, so to speak. We can simply look at a chart in the last couple of weeks for the S&P 500 and see that simple indicators like the relative strength indicator (RSI) and the moving average convergence-divergence indicator (MACD) have also told us that the market is heading south. At the moment, much of the market is oversold, so a short-term bounce could take place. Still, our indicators show weakness heading into September.

EQ: Are there any sectors or industry groups that you’re watching right now?

Turner: There are pockets of strength, though I’m not necessarily looking to go long here. The iShares Dow Jones US Pharmaceuticals ($IHE) is sitting on its 50-day moving average and it is oversold based on its RSI. Because pharmas is more of a defensive industry group, I’m going to be curious to see here if it can bounce to the upside and stay above its 50-day moving average.

Also, the Guggenheim Solar ($TAN), which we’ve talked about before, seemed totally unphased by the broader market rollercoaster on Wednesday, and it  moved up on that down day . It’s also sitting on its 50-day moving average. Now whether it can hold here or not, I don’t know, but just out of interest, I’ll keep an eye on it. Overall though, I’m going to be an observer for  a few days and see what happens  before I commit to any new long positions.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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Results for IYR
Patricia Johnson
29 Mar 15 04:10:02
RT @seeitmarket: New Post - "Sustainable Investing In Real Estate En Vogue" http://t.co/Zlhh59umvt by @JoshuaSchroede2 | $VNQ $IYR $REG $BDN
innov8v
28 Mar 15 02:26:46
ugly week but no exits hit...long $ACAD $AFFX $ALKS $ASHR $BSX $EA $ENDP $EPHE $EPI $FTNT $FV $HOLX $IPXL $ISIS $IYR $NDX $SIMO TSRA $VTI
Clark Joseph Kent
27 Mar 15 19:05:30
Weekly ETF Losers: $GAZ -12.14% $UNG -5.46% $EWZ -3.96% $VNQ -3.64% $IYR -3.59%.
gordon gekko is god
27 Mar 15 17:33:55
A look at REITs in a rising rate environment http://t.co/ZLWwUcKDVv $IYR, $VNQ, $DRN, $URE, $SRS, $ICF, $SCHH, $RWR, $KBWY, $DRV, $REK,
gordon gekko is god
27 Mar 15 17:33:00
Weekly ETF Gainers / Losers http://t.co/QVMHd3M36e $OIL, $USO, $BNO, $PSLV, $FCG, $GAZ, $UNG, $EWZ, $VNQ, $IYR
Kym L
27 Mar 15 16:59:07
$IYR chart https://t.co/Kl3ymt5S5q via http://t.co/xwjHFVSbOf
Kym L
27 Mar 15 15:32:52
$IYR Weekly https://t.co/6eZDVQ5gqj via http://t.co/xwjHFVSbOf
Aditya Polsani
27 Mar 15 14:41:20
A look at REITs in a rising rate environment $IYR $VNQ $DRN $URE $SRS $ICF $SCHH $RWR $KBWY $DRV $REK http://t.co/qnMZiOZDdy
dailystockplays.com
27 Mar 15 13:43:31
NR7 http://t.co/EUXZPvxckv $VXX $UGAZ $UVXY $FCX $XIV $XLE $WLL $SD $NOK $MRK $IYR $DGAZ $OAS $SDRL $XOP $UNG $AUY $IBN $JNJ $SPLS
Andrea Calissano
27 Mar 15 13:38:33
Weekly ETF Gainers / Losers $OIL $USO $BNO $PSLV $FCG $GAZ $UNG $EWZ $VNQ $IYR http://t.co/A6h05Es28O
Leni
27 Mar 15 12:59:59
$TOL 1.71% $MTH 3.46% $LEN 0.64% $IYR 0.09 holding basket into next week
Leni
27 Mar 15 12:48:01
Alright bought a little of the etf $IYR 78.95
Financial Stocks
27 Mar 15 12:41:27
A look at REITs in a rising rate environment http://t.co/5EyZja3KYF $IYR $VNQ $DRN $URE
SA Breaking News
27 Mar 15 12:41:27
A look at REITs in a rising rate environment http://t.co/lHX7Unp4ze $IYR $VNQ $DRN $URE
Anthony
27 Mar 15 11:24:58
RT @OptionsFlux: $IYR May. 15, 2015 PUT 77.00 : +29.805 contracts add to OI
Lauren Holmes
27 Mar 15 08:05:14
Focus on strong ETFs going forward $XLP $IYR $XLU. Best risk/reward here. Check our best ideas http://t.co/huaLsH8iDZ
OptionsFlux
27 Mar 15 05:40:55
$IYR May. 15, 2015 PUT 77.00 : +29.805 contracts add to OI
Market Int Center
27 Mar 15 05:11:48
iShares DJ US Real Estate $IYR Showing Neutral Technicals With Resistance At $79.47 ( http://t.co/8eL8vBLRGr )
MarketStalker
26 Mar 15 20:19:13
Focusing on ETF's tomorrow, hopefully that mitigates some vega. $FXI $IYR $XLU $EWW $UNG
dailystockplays.com
26 Mar 15 14:16:45
Below 20 SMA http://t.co/3JagrOTfxx $EEM $GDX $MGM $SPLS $NXPI $SRC $RSX $MCD $COH $GGB $IYR $CBS $SMFG $AES $TCK $MDT $IAG $MTG $VTR $XHB
Joe Cool
26 Mar 15 11:40:08
Long $IYR Jan'16 72 $calls 8.4, stop 76.42 on common, tgt 93 on common
REIT Investor
26 Mar 15 11:21:48
Equity REITs: Still Worth Buying? http://t.co/HGiGgAFbPZ $IYR $VNQ $DRN $URE $SRS $ICF $SCHH $RWR $KBWY $DRV $REK $FRI $FTY $PSR $WREI
Income Investing SA
26 Mar 15 11:21:48
Equity REITs: Still Worth Buying? http://t.co/r6Dz1dlrlh $IYR $VNQ $DRN $URE $SRS $ICF $SCHH $RWR $KBWY $DRV $REK $FRI $FTY $PSR $WREI
Seeking Alpha
26 Mar 15 11:21:47
Equity REITs: Still Worth Buying? http://t.co/MXrrnISIlQ $IYR $VNQ $DRN $URE $SRS $ICF $SCHH $RWR $KBWY $DRV $REK $FRI $FTY $PSR $WREI
Smarter Analyst
26 Mar 15 10:56:50
Income Inequality and Its Real Estate Implications http://t.co/g6yH2rR0rU $MORL $QQQ $REM $SPY $IYR $ITB $XHB $VNQ
D
26 Mar 15 08:40:53
America's Shopping Malls Aren't Actually Dying - $iyr $ggp $spg http://t.co/wal6DkF8Ny
OneChicago
26 Mar 15 08:12:02
$IYR 20150417 Block Trade: 415 trade. ~$3.3 MM notional value.
SogoTrade
26 Mar 15 06:23:42
Just released! SogoTrade’s Morning Call on Today’s Spotlight Stocks $DAL $NSC, $IYR, $EWY, $USB, $TXN, $GSH... http://t.co/mM5IN2ZQX3
SogoTrade
26 Mar 15 06:23:34
RT @SogoTradeOption: Just released! SogoTrade’s Morning Call on Today’s Spotlight Stocks $DAL $NSC, $IYR, $EWY, $USB, $TXN, $GSH $YGE …
SogoTrade
26 Mar 15 06:23:30
Just released! SogoTrade’s Morning Call on Today’s Spotlight Stocks $DAL $NSC, $IYR, $EWY, $USB, $TXN, $GSH $YGE http://t.co/X0zS7kqmIu
SogoTrade Options
26 Mar 15 06:23:05
Just released! SogoTrade’s Morning Call on Today’s Spotlight Stocks $DAL $NSC, $IYR, $EWY, $USB, $TXN, $GSH $YGE http://t.co/RQno2IcZVA
Market Int Center
26 Mar 15 05:13:39
iShares DJ US Real Estate $IYR Showing Support Near $77.80 ( http://t.co/rVvY9ZEnTR )
Beverage Consulting
25 Mar 15 23:42:30
RT @langanstocks: $FEYE Stock Message Board Updated Friday, March 13, 2015 08:03:26 AM $TWTR $KO $UGAZ $IYR http://t.co/lgsDvtowsj
Breaking News
25 Mar 15 16:10:02
$IYR: iShares Dow Jones US Real Estate (ETF) Plans $0.66 Quarterly ...: http://t.co/oR6g7sEUSe
US Banking News
25 Mar 15 16:09:43
iShares Dow Jones US Real Estate $ETF Plans $0.66 Quarterly Dividend $IYR http://t.co/UzZaiMbZ2f
Langan Stocks
25 Mar 15 11:51:07
$IYR Reviews Updated Wednesday, March 25, 2015 2:03:21 PM $GDX $MCP $SLV $SDS http://t.co/A5Otxb6CLH
Smarter Analyst
25 Mar 15 11:25:05
U.S. New Home Sales Jump to 7-year High? Must Have Been a Cold Winter… http://t.co/4W25x46lNO $ITB $IYR $MORL $QQQ $SPY $VNQ $XHB $REM
Rosner Stocks
25 Mar 15 10:52:05
$SBUX Reviews Updated Wednesday, March 25, 2015 12:59:23 PM $EWJ $IYR $ABX $BMY http://t.co/z9sGqwKHoY
Mike Lanuto
25 Mar 15 09:58:54
http://t.co/jj8ZkSIdwJ Neutral on $IYR STC $IYR Apr15 83/81 Put Spread for $1.58 credit 39% winner in 5 days! #managingwinners
PolgarStocks
25 Mar 15 09:21:55
$IYR Stock Forum Updated Wednesday, March 25, 2015 12:07:15 PM $NTEK $CVS $RIO $IMGN http://t.co/3yaFXLblNX
BlockTradeAlert
25 Mar 15 09:06:26
BLOCK TRADE: $IYR 650,000 shares @ $79.92 [12:06:25]
Rosner Stocks
25 Mar 15 08:51:20
$IYR Opinions Updated Wednesday, March 25, 2015 10:59:25 AM $IYR $CTIX $CVX $SUNE http://t.co/hHCzMpIv6Q
Langan Stocks
25 Mar 15 08:48:41
$BIS Last Price Updated Wednesday, March 25, 2015 11:03:22 AM $CSIQ $NFLX $BIS $IYR http://t.co/hwMQWJyET6
Langan Stocks
25 Mar 15 08:48:36
$URI Stock Forum Updated Wednesday, March 25, 2015 11:03:22 AM $IYR $ECDP $CAT $SLW http://t.co/Ela5fPhyfv
BlockTradeAlert
25 Mar 15 08:41:53
BLOCK TRADE: $IYR 500,000 shares @ $80.19 [11:41:52]
BlockTradeAlert
25 Mar 15 08:24:20
BLOCK TRADE: $IYR 500,000 shares @ $80.44 [11:24:20]
BlockTradeAlert
25 Mar 15 08:23:50
BLOCK TRADE: $IYR 500,000 shares @ $80.44 [11:23:48]
PolgarStocks
25 Mar 15 08:21:23
$JNK Short Sales Updated Wednesday, March 25, 2015 11:07:18 AM $XLP $XLY $MEIP $IYR http://t.co/39HTmBNTNA
PolgarStocks
25 Mar 15 08:21:19
$FWM Investor Opinions Updated Wednesday, March 25, 2015 11:07:18 AM $SBUX $PSUN $FCX $IYR http://t.co/T8v6xVuzbc
IH News Desk
25 Mar 15 08:15:21
$IYR Investor Opinions Updated Wednesday, March 25, 2015 10:11:14 AM $ALGN $CYBR $F $GG http://t.co/j8FbEQVd10
				
				
By  +Follow August 22, 2013 3:19PM
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