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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.

 
Results for IYR
Alfredo Gilham
16 Apr 14 15:07:04
$IYR [video] Detroit homes up for auction http://t.co/9xjfIDxv2p
ShortStockVolume.com
16 Apr 14 14:31:04
Top Shorted Stocks 04/16/14... 14. $IYR 71.36% 15. $EEM 70.82% 16. $XLB 70.70% 17. $HST 70.50% 18. $AMLP 70.39% 19. $ALU 70.27%...
ShortStockVolume.com
16 Apr 14 14:31:01
Top Shorted Stocks 04/16/14... 13. $BBT 72.06% 14. $IYR 71.36% 15. $EEM 70.82%... http://t.co/mBPvty8IiI
MasterChartsTrading
16 Apr 14 14:15:17
No Buy Signal yet http://t.co/GCCj58u0Dy $SPY $IYR $TLT $GLD $GDX $NUGT $QQQ $UNG $USO #stocks $XLU http://t.co/IHd45OM80h
Sunrise Trader
16 Apr 14 13:54:42
Candle glance $XLF $IYT $IYR $XLK and more http://t.co/WiCkCLgs0f
David Blair
16 Apr 14 12:33:13
$IYR WEEKLY looks ready to run again after a nice pullback. http://t.co/fFjbalmJ3T
Leni
16 Apr 14 12:05:24
Hi'r hi $IYR next res 69.33
Alfredo Gilham
16 Apr 14 09:18:34
$IYR [video] March housing starts up 2.8% http://t.co/5UEH1lPoyf
Alfredo Gilham
16 Apr 14 09:12:38
$IYR 9:45 am iShares DJ Real Estate modestly firmer, hovering near six week highs http://t.co/OSpNWwuH0m
Briefing.com
16 Apr 14 08:45:40
$IYR: iShares DJ Real Estate modestly firmer, hovering near six week highs http://t.co/vqtguoAjKe
Sam DiSalvo
16 Apr 14 08:29:06
RT @Master_Charts: Is This a Rally Into Resistance? http://t.co/GCCj58u0Dy $SPY $IYR $TLT $GLD $GDX $NUGT $QQQ $UNG $USO #stocks $XLU http:…
BlockTradeAlert
16 Apr 14 08:21:18
BLOCK TRADE: $IYR 500,000 shares @ $68.61 [11:21:17]
Market Int Center
16 Apr 14 08:19:02
iShares DJ US Real Estate $IYR Showing Bullish Technicals With Resistance At $69.02 ( http://t.co/fLHQZd4YSS )
Leni
16 Apr 14 07:48:02
$IYR res 69.33/ 69.59
Greg Harmon, CMT
16 Apr 14 07:41:05
rolled up some $IYR Calls awhile back to the Apr 69, just sold them at 10c, flat now, net 31%
Vix Contango
16 Apr 14 07:39:46
$TLT $IYR leadership means folks putting money in safe place to get dividends. Market refutes "3% growth" pundit story
Alfredo Gilham
16 Apr 14 07:33:35
$IYR 9:45 am iShares DJ Real Estate modestly firmer, hovering near six week highs http://t.co/OSpNWwuH0m
Vix Contango
16 Apr 14 07:31:22
Important switch in YTD leadership yesterday: $TLT (bonds) 9.10% $IYR (real est) 8.58% $GLD (gold) 8.07% $OIL (oil) 6.23% $DBC (com) 3.39%
Alfredo Gilham
16 Apr 14 06:36:11
$IYR [video] March housing starts up 2.8% http://t.co/5UEH1lPoyf
MasterChartsTrading
16 Apr 14 04:15:37
Is This a Rally Into Resistance? http://t.co/GCCj58u0Dy $SPY $IYR $TLT $GLD $GDX $NUGT $QQQ $UNG $USO #stocks $XLU http://t.co/IHd45OM80h
Swing Trade Alerts
16 Apr 14 03:23:22
THEFLYNEWS:$MNKD $IYR Stocks with implied volatility below IV index mean; IYR MNKD: Full Story http://t.co/ccR2OHfg0K
The Fly
16 Apr 14 03:18:39
$MNKD $IYR Stocks with implied volatility below IV index mean; IYR MNKD: Full Story http://t.co/BHiB9kwc7W
Yahaira Landry
15 Apr 14 18:38:53
$IYR Largest option trades in equit http://t.co/s05YM6MWUR
Johann Farmer
15 Apr 14 17:47:17
$IYR Largest option trades in equit http://t.co/3lL9jwlIia
Cammie Filman
15 Apr 14 15:02:38
$IYR Largest option trades in equities http://t.co/vOtYxVC5qu
ShortStockVolume.com
15 Apr 14 14:31:50
Top Shorted Stocks 04/15/14... 20. $PHM 66.45% 21. $BBD 66.32% 22. $EPI 66.29% 23. $WLT 66.05% 24. $IYR 65.70% 25. $EWT 64.84%
ShortStockVolume.com
15 Apr 14 14:31:49
Top Shorted Stocks 04/15/14... 24. $IYR 65.70% 25. $EWT 64.84% http://t.co/Am6ZyxAunb
Leni
15 Apr 14 07:44:49
Booking gains in $SPG +1.98% Still in $IYR too -0.66% I may keep We'll see if mkt can manage a little rally
MasterChartsTrading
15 Apr 14 03:00:11
Markets Rebound, but no buy signal yet http://t.co/3fqSkLdoD6 $SPX $SPY $IYR $TLT $GLD $GDX $NUGT $QQQ $UNG $USO http://t.co/9yDsBrKq12
Donte Aldaine
15 Apr 14 02:42:55
$IYR Largest option trades in equities http://t.co/bOog8pTHup
Volatility Indexes
14 Apr 14 19:24:31
RT @Master_Charts: Multiple Sell Signals http://t.co/aYto2elMO9 #MARKETBREADTH $SPX $SPY $IYR $TLT $GLD $GDX $NUGT $SPXU $QQQ $UNG $USO htt…
ShortStockVolume.com
14 Apr 14 14:31:22
Top Shorted Stocks 04/14/14... 8. $IYR 76.63% 9. $IVV 76.45% 10. $XLU 76.07% 11. $NVDA 75.93% 12. $SPLS 73.79% 13. $ABT 73.61%...
ShortStockVolume.com
14 Apr 14 14:31:20
Top Shorted Stocks 04/14/14... 7. $RSX 76.97% 8. $IYR 76.63% 9. $IVV 76.45%... http://t.co/rUxNIRUKY5
Legend Boulstridge
14 Apr 14 14:21:53
$IYR Largest option trades in equities http://t.co/FiGr2BYUVr
trader_79
14 Apr 14 14:13:35
RT @AttainCapital: 8 Asset Classes & their performance YTD. http://t.co/SbFRGzPdnY $SPY $QAI $ACWX $BND $GSG $IYR
Shawn
14 Apr 14 13:40:46
@e_dawg8 BTW, since Apr 1, the model has been out of stocks $SPY and into US Real Estate $IYR and T Bonds $TLT. Should have listened to it.
TheSportsExecutive™
14 Apr 14 12:43:53
RT @AttainCapital: 8 Asset Classes & their performance YTD. http://t.co/SbFRGzPdnY $SPY $QAI $ACWX $BND $GSG $IYR
TheTalismenEmporium
14 Apr 14 12:08:55
RT @AttainCapital: 8 Asset Classes & their performance YTD. http://t.co/SbFRGzPdnY $SPY $QAI $ACWX $BND $GSG $IYR
Attain Capital
14 Apr 14 12:08:28
8 Asset Classes & their performance YTD. http://t.co/SbFRGzPdnY $SPY $QAI $ACWX $BND $GSG $IYR
Pike Dean
14 Apr 14 11:16:06
$IYR Largest option trades in equities http://t.co/pb6B3FyqPm
Alfredo Gilham
14 Apr 14 11:13:34
$IYR The Search for Higher Yielding Assets http://t.co/O6oDJXA4K7
Attain Capital
14 Apr 14 10:25:26
Here's where the Asset Class Scoreboard stands YTD. http://t.co/WTXd0M19Pd $SPY $QAI $ACWX $BND $GSG $IYR
Ambrose Long
14 Apr 14 10:23:03
$IYR Largest option trades in equities http://t.co/I5A4Ahh1Jw
OneChicago
14 Apr 14 09:16:02
$IYR Apr/May Block Roll Trade: 2254 trade. ~$30.4 MM notional value.
Vix Contango
14 Apr 14 08:31:55
$NUGT +7.43% $GLD +0.96% $IYR +0.30% $DBC +0.84% #RiskOFF for sure. $SPY +0.95% in midday is doing good job of disguising the ugly afternoon
Gigi Rhoads
14 Apr 14 07:16:37
$IYR 6 Traits Of Successful ETF Invest http://t.co/E02zxcAOHl
Marin Calderon
14 Apr 14 06:17:26
$IYR 6 Traits Of Successful ETF Invest http://t.co/DQVgYefPOX
MasterChartsTrading
13 Apr 14 21:58:14
Multiple Sell Signals http://t.co/aYto2elMO9 #MARKETBREADTH $SPX $SPY $IYR $TLT $GLD $GDX $NUGT $SPXU $QQQ $UNG $USO http://t.co/m2n6DNluhw
M.Almuzaini
13 Apr 14 21:46:29
RT @gtlackey: April 11, 2014 Relative Strength Scans http://t.co/jbKyhS32wZ $USO $QQQ $IDU $IEZ $IYR $NBR $CXO $FSLR $DDD $YELP
erica
13 Apr 14 20:58:26
6 Traits Of Successful ETF Investors $DXJ $IYR $VNQ http://t.co/1nQcSYT2sy
				
				
By  +Follow August 22, 2013 3:19PM
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