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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.


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Results for IYR
Investors Hangout
15 Sep 14 20:51:29
$REVI Prev Close Click Here: http://t.co/9N0SeQSlcu Also See: $IYR $MLCG $MHYS $BITA ~
Chasing Stars
15 Sep 14 20:31:53
$PLKD Volume Click Here: http://t.co/VvcMVH5Arl Also See: $LOCO $IYR $YY $NSAV ~
Investors Hangout
15 Sep 14 20:16:13
$NWTR 52Wk High Click Here: http://t.co/HzWZBqP6MZ Also See: $SDRL $IYR $TRV $EDN ~
Investors Hangout
15 Sep 14 20:05:40
$NTEK EOD Data Click Here: http://t.co/MVQ9l8Kw00 Also See: $GS $HD $CAT $IYR ~
Rosner Stocks
15 Sep 14 19:50:02
$MVTG Day High Click Here: http://t.co/BB7mSbyoDR Also See: $IYR $NWTR $GYST $UNH ~
iHangout
15 Sep 14 19:36:36
http://t.co/jYcEVtZYAh Stock_Tracker: Stock DD Board: DJ US Real Estate Ishares (IYR) 70.95 $IYR Watch http://t.co/TMKTgFiUdK
Stock_Tracker
15 Sep 14 19:31:39
DJ US Real Estate Ishares (IYR) 70.95 $IYR Watch for iShares Dow Jones US Real Estate Index Fund to Potentiall http://t.co/d895dOvqHm
Investors Hangout
15 Sep 14 19:02:45
$MHYS Quotes Click Here: http://t.co/kl3DqZoRfh Also See: $VZ $IYR $HOT $HYG ~
Ben Silverberg
15 Sep 14 18:12:30
Leading market sectors lower Monday included: $QQQ $SOCL $KRE $IYR $IWM $XRT $SMH $IBB $XME $RSX $FXI $TAN $KOL $DBA $DBB
Stock Forums
15 Sep 14 18:07:28
$GYST Day Low Click Here: http://t.co/Uukmz1BHwR Also See: $IYR $GSAT $GDXJ $SLW ~
Stock Forums
15 Sep 14 17:53:43
$GEIG Shares Click Here: http://t.co/fGYVHiOwfE Also See: $GEIG $IYR $SBUX $PLKD ~
Investors Hangout
15 Sep 14 17:36:28
$FNMA Day High Click Here: http://t.co/QlYwqIvSvg Also See: $SBUX $IYR $IWM $NFLX ~
OTPicks.com
15 Sep 14 17:20:51
http://t.co/hjgLwIcNgz DennyT: IYT Bussinessweek $IYT $IYR $TASR $MLHC $EEM: DennyT http://t.co/RLqqzFMmBT http://t.co/hjgLwIcNgz
OTPicks.com
15 Sep 14 17:20:50
http://t.co/QkCFZ8H3V8 DennyT: IYT Bussinessweek $IYT $IYR $TASR $MLHC $EEM: DennyT http://t.co/fRxrdQJPfu http://t.co/QkCFZ8H3V8
Investors Hangout
15 Sep 14 17:03:04
$EPGL Company Info Click Here: http://t.co/04g0IGgDJc Also See: $XLB $MRK $MDSO $IYR ~
Rosner Stocks
15 Sep 14 15:30:57
$ALL Market Cap Click Here: http://t.co/jO4lFVDUq8 Also See: $IYR $RCPI $LO $CEF ~
PennyStock Zone
15 Sep 14 15:17:57
Review of amazing stock picker Super_Trades! http://t.co/xbEoJsJdug $WEN $CHA $IYR $SOXS #stocks #trading
Rosner Stocks
15 Sep 14 14:29:13
$MMP/UN.TO Stock Message Board Click Here: http://t.co/7QsIW7pkJ2 Also See: $GOOGL $IYR $PLKD $GYST ~
Stock Forums
15 Sep 14 14:25:21
$MMP/UN.TO Dividend Click Here: http://t.co/7369lMgI2x Also See: $IYR $CGRA $LGF $BIDU ~
John Mackel
15 Sep 14 14:09:19
Took a lot of profits off the table today and closed one position at a small loss. The break in $IYR on Friday may have been a warning sign.
Investors Hangout
15 Sep 14 12:40:05
$JPM E.P.S. Click Here: http://t.co/KwGvczBdRc Also See: $NBRI $XLB $IYR $NUGT ~
Chasing Stars
15 Sep 14 12:24:01
$IYR Message Board Posts Click Here: http://t.co/zc7f0Py1uk Also See: $EWZ $BRK/B $XIV $XLB ~
Investors Hangout
15 Sep 14 12:04:28
$IYR Stock Message Board Click Here: http://t.co/JOAWPD07wE Also See: $NSPH $GYST $AEM $MU ~
Rosner Stocks
15 Sep 14 11:59:17
$IYR Volume Click Here: http://t.co/2k9Ao6pZon Also See: $EOD $SLW $FXE $UVXY ~
Stock Forums
15 Sep 14 11:58:28
$IYR Filings Click Here: http://t.co/foiNp5hR0p Also See: $WMT $AVEW $T $NBRI ~
Investors Hangout
15 Sep 14 11:55:18
$IYR Shares Click Here: http://t.co/qQtv0Gsb5o Also See: $MBLY $NFLX $VELA $MMP/UN.TO ~
Briefing.com
15 Sep 14 11:39:26
$IYR: iShares DJ Real Estate extends aggressive slide off last week's high near support zone http://t.co/sUrtHMTPXw
Market Int Center
15 Sep 14 11:16:58
Potential iShares DJ US Real Estate $IYR Trade Has 2.48% Downside Protection ( http://t.co/7cfTdnkRTf )
Investors Hangout
15 Sep 14 10:23:13
danrocks: $F Starting to get interesting $C $XLU $IYR $UUP http://t.co/JIKTHFLlDi
Investors Hangout
15 Sep 14 10:23:08
danrocks: $F Starting to get interesting $C $XLU $IYR $UUP http://t.co/tEOCZ4sUbS
danrocks
15 Sep 14 10:11:15
$F Starting to get interesting $C $XLU $IYR $UUP $XLV http://t.co/UmASFAtd2m
Jake13
15 Sep 14 09:57:30
$IYR Buy or Sell Opinion Click here to find out if $IYR is a buy hold or sell. Watching these stocks. $SLW $BB http://t.co/f7ttnwHU0l
Aaron
15 Sep 14 09:48:51
ICYMI The rotation report is live: http://t.co/i8YT8NZfDk $XOP $XLE $IYR $KRE $SPY $XLB"
Investors Hangout
15 Sep 14 09:16:15
DennyT: IYT Bussinessweek $IYT $IYR $TASR $MLHC $EEM http://t.co/mUwwE2JmPd
MarketCurrents
15 Sep 14 09:16:09
REIT investors may want to gaze overseas http://t.co/WMUhoKLkYj $IYR $VNQ $DRN $URE
Investors Hangout
15 Sep 14 09:15:48
DennyT: IYT Bussinessweek $IYT $IYR $TASR $MLHC $EEM http://t.co/ZySuFbCcFG
Jake13
15 Sep 14 09:11:11
$WFM Buy or Sell? Click here to find out if $WFM is a buy hold or sell. Watching these stocks. $SH $IYR $CSIQ http://t.co/ZdDdmMQtMq
Extreme Stocks
15 Sep 14 08:56:35
DennyT: IYT Bussinessweek $IYT $IYR $TASR $MLHC $EEM http://t.co/RQ21fIcS2t
DennyT
15 Sep 14 08:51:39
IYT Bussinessweek $IYT $IYR $TASR $MLHC $EEM Opinion Today,Volume,Current Price,Headlines,Picking Up MOMO Stoc http://t.co/wYcvTh4MT3
Rosner Stocks
15 Sep 14 08:34:27
$FSLR E.P.S. Click Here: http://t.co/v1hDcqrUY1 Also See: $NSAV $IYR $MTVX $HYG ~
danrocks
15 Sep 14 08:32:09
$DUST Getting Interesting $HFCO $GLD $EBAY $FEYE $IYR http://t.co/zVIIp0ho2N
BATTLE THE BTK
15 Sep 14 08:28:20
$loco momo names taking a hit. $iyr at the lows. $ibb lows
Stock Forums
15 Sep 14 08:13:39
$F % Change Click Here: http://t.co/qnIgS4xh2I Also See: $MU $ANY $IYR $NWTR ~
Investors Hangout
15 Sep 14 07:46:42
Jake13: $IYR Sell? Click here to find out if $IYR is a http://t.co/3I4tgV2umH
Investors Hangout
15 Sep 14 07:46:41
Jake13: $IYR Sell? Click here to find out if $IYR is a http://t.co/JXtR4X25YH
Stock_Tracker
15 Sep 14 07:39:22
DJ US Real Estate Ishares (IYR) 71.26 $IYR Watch for iShares Dow Jones US Real Estate Index Fund to Potentiall http://t.co/FE5El3URPM
Kym L
15 Sep 14 07:26:32
Interesting, & not sure if it's meaningful, but the "uglies" I mentioned last night are not making new lows $XLU $IYR $XLI (did) $XLE $XHB
Jake13
15 Sep 14 07:26:17
$IYR Sell? Click here to find out if $IYR is a buy hold or sell. Watching these stocks. $HNU.TO $XLY $AA $SPXL http://t.co/QjTX43FfPn
Jake13
15 Sep 14 07:18:09
$JRJC Sell? Click here to find out if $JRJC is a buy hold or sell. Watching these stocks. $IYR $KO $CENX $JNUG http://t.co/4pMVVF3cEV
Investors Hangout
15 Sep 14 06:17:52
$DIA Tick Click Here: http://t.co/eeeTkc7ki9 Also See: $MLCG $AXP $BRK/B $IYR ~
				
				
By  +Follow August 22, 2013 3:19PM
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