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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
Damian White
28 Jan 15 15:34:07
@chessNwine $GGP met estimates, guided down. Might be starting, $IYR, $SPG on Friday. Not the prettiest close.
Langan Stocks
28 Jan 15 14:57:41
$TBT Company Info Updated Wednesday, January 28, 2015 5:03:24 PM $EWA $VXX $EWA $IYR http://t.co/E2RvJhR4aT
ShortStockVolume.com
28 Jan 15 14:32:14
Top Shorted Stocks 01/28/15... 8. $GGB 80.26% 9. $NE 79.94% 10. $LPI 79.70% 11. $IYR 79.21% 12. $ITB 78.91% 13. $XHB 78.73%...
ShortStockVolume.com
28 Jan 15 14:32:12
Top Shorted Stocks 01/28/15... 10. $LPI 79.70% 11. $IYR 79.21% 12. $ITB 78.91%... http://t.co/hlOgVmBHdy
IH News Desk
28 Jan 15 14:13:11
$PII Company Info Updated Wednesday, January 28, 2015 4:11:22 PM $HYG $MU $IYR $MU http://t.co/lI0XLrRENv
PolgarStocks
28 Jan 15 13:02:45
$GDXJ Stock Forum Updated Wednesday, January 28, 2015 3:07:23 PM $BABA $UGAZ $SPXL $IYR http://t.co/XyxtyhXXVk
Damian White
28 Jan 15 12:51:42
@chessNwine If they go, $IYR probably isn't far behind...
Anthony
28 Jan 15 12:44:02
RT @OptionsFlux: $IYR Total CALL OI CHANGE +674 / Total PUT OI CHANGE +13.630
Alpha Maven
28 Jan 15 11:45:16
RT @seeitmarket: New Post - "Sector Relative Strength Check: Leaders & Laggards" http://t.co/5RwplRfajI by @ATMcharts | $SPY $IBB $SMH $IYR…
Nameless
28 Jan 15 11:44:36
$iyr chillin , waitin on next direction for this market leader
Andy Nyquist
28 Jan 15 11:37:47
RT @seeitmarket: New Post - "Sector Relative Strength Check: Leaders & Laggards" http://t.co/5RwplRfajI by @ATMcharts | $SPY $IBB $SMH $IYR…
PolgarStocks
28 Jan 15 11:00:42
$XLI Last Price Updated Wednesday, January 28, 2015 1:07:25 PM $ABX $CY $XLB $IYR http://t.co/L91MHVICPI
Investors Hangout
28 Jan 15 10:38:39
DennyT: CLVS Basic Chart $CLVS $USO $IYR $UGAZ $RLYP http://t.co/kS5X8bwEEB
iHangout
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clayton: Estrella's Sizzling Hot Stock Plays: $IYR 82.96 http://t.co/bX8FxnNxmC
iHangout
28 Jan 15 10:32:39
clayton: Estrella's Sizzling Hot Stock Plays: $IYR 82.96 http://t.co/CCNpsoZ9Bn
clayton
28 Jan 15 10:30:30
$IYR 82.96 http://t.co/EMxKzXhgLg
DennyT
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CLVS Basic Chart $CLVS $USO $IYR $UGAZ $RLYP Buy?,Parabolic SAR,Open,Recent Headlines,On Radar Stock Quote htt http://t.co/Bex1jl6j0B
Lauren Holmes
28 Jan 15 10:04:54
Focus on strong ETFs going forward $XLP $IYR $XLU. Best risk/reward here. Check our best ideas http://t.co/VrsGMCgPOC
PolgarStocks
28 Jan 15 10:00:40
$IWC Stock Price Updated Wednesday, January 28, 2015 12:07:29 PM $SIRI $CNET $IYR $GS http://t.co/0B9rD6FpLp
Investors Hangout
28 Jan 15 09:48:15
chartguy89: JNK Stock Chart $JNK $SMH $VRTX $IYR http://t.co/aoWZOjDt6y
Investors Hangout
28 Jan 15 09:47:51
chartguy89: JNK Stock Chart $JNK $SMH $VRTX $IYR http://t.co/sjHSTLBO9U
lookn4wins
28 Jan 15 09:37:10
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iHangout
28 Jan 15 09:32:38
chartguy89: Stock Charts: JNK Stock Chart $JNK $SMH $VRTX $IYR http://t.co/khFZkRBXLw
iHangout
28 Jan 15 09:30:56
chartguy89: Stock Charts: JNK Stock Chart $JNK $SMH $VRTX $IYR http://t.co/XqPgH777Zl
chartguy89
28 Jan 15 09:27:47
JNK Stock Chart $JNK $SMH $VRTX $IYR http://t.co/1UV0vYLir5 http://t.co/zn2glLwolG
Dividend Master
28 Jan 15 09:08:45
@Ponzi1945 its the whole space . I mean look @ $IYR . But these big names at absurd cap rates
IH News Desk
28 Jan 15 09:07:16
$LVS Investor Opinions Updated Wednesday, January 28, 2015 11:11:26 AM $KGC $IYR $SBUX $DXJ http://t.co/uXylbw0rlv
Rosner Stocks
28 Jan 15 08:59:42
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PolgarStocks
28 Jan 15 08:59:37
$GS Opinions Updated Wednesday, January 28, 2015 11:07:26 AM $DAL $IWC $IBB $IYR http://t.co/hTWLVfFlk9
Patrick Ghosh
28 Jan 15 08:54:41
this is how i know rates are about to rise and jack up paper economy: i spent many hours of my life working on which REITs to buy... $IYR.
Rag Time Gal
28 Jan 15 08:11:50
RT @seeitmarket: New Post - "Sector Relative Strength Check: Leaders & Laggards" http://t.co/5RwplRfajI by @ATMcharts | $SPY $IBB $SMH $IYR…
Aaron
28 Jan 15 08:09:19
RT @seeitmarket: New Post - "Sector Relative Strength Check: Leaders & Laggards" http://t.co/5RwplRfajI by @ATMcharts | $SPY $IBB $SMH $IYR…
OTPicks.com
28 Jan 15 07:53:47
http://t.co/NYsxQOU64w leahanne: $IYR DJ US Real Estate Ishares (IYR) 83.41 +0.38: leahanne http://t.co/GSplUoZBRc http://t.co/NYsxQOU64w
Sheldon McIntyre
28 Jan 15 07:45:22
RT @seeitmarket: New Post - "Sector Relative Strength Check: Leaders & Laggards" http://t.co/5RwplRfajI by @ATMcharts | $SPY $IBB $SMH $IYR…
Investors Hangout
28 Jan 15 07:45:14
leahanne: $IYR DJ US Real Estate Ishares (IYR) 83.41 +0.38 http://t.co/3TM7IN5B1d
iHangout
28 Jan 15 07:45:14
leahanne: ALERTS, HOT STOCKS & CHARTS: $IYR DJ US Real Estate Ishares (IYR) 83.41 +0.38 http://t.co/9UTVzQAFlA
Investors Hangout
28 Jan 15 07:45:12
leahanne: $IYR DJ US Real Estate Ishares (IYR) 83.41 +0.38 http://t.co/szeky26m4R
leahanne
28 Jan 15 07:42:42
$IYR DJ US Real Estate Ishares (IYR) 83.41 +0.38 (+0.46%) $DUST $NBG $NBD.TO http://t.co/L8uJXv6ysD
Aaron
28 Jan 15 07:41:35
"@seeitmarket: New Post - "Sector Relative Strength Check: Leaders & Laggards" http://t.co/vozF7eVbmf $SPY $IBB $SMH $IYR $IYT $XLU $XLF"
See It Market
28 Jan 15 07:34:18
New Post - "Sector Relative Strength Check: Leaders & Laggards" http://t.co/5RwplRfajI by @ATMcharts | $SPY $IBB $SMH $IYR $IYT $XLU $XLF
Jonathan Davis
28 Jan 15 07:32:47
RT @allstarcharts: Here's the audio from the @Benzinga morning show yesterday https://t.co/xgHU9wnxnI $CL_F $USO $OIH $XOP $XLI $ITA $TNX $…
J.C. Parets
28 Jan 15 07:30:07
Here's the audio from the @Benzinga morning show yesterday https://t.co/xgHU9wnxnI $CL_F $USO $OIH $XOP $XLI $ITA $TNX $IYR $XLU
tony holland
28 Jan 15 07:27:58
RT @hmeisler: RT @ivanhoff: New all-time highs for Utilities and REITs. Chasing Yield should be in the Winter Olympics. $XLU $IYR
Kym L
28 Jan 15 07:25:34
@TweetLeni $IYR looks like a house on fire as well
Ralph Lipford
28 Jan 15 07:05:31
RT @hmeisler: RT @ivanhoff: New all-time highs for Utilities and REITs. Chasing Yield should be in the Winter Olympics. $XLU $IYR
Peter Herman
28 Jan 15 07:04:00
RT @hmeisler: RT @ivanhoff: New all-time highs for Utilities and REITs. Chasing Yield should be in the Winter Olympics. $XLU $IYR
danrocks
28 Jan 15 07:03:12
$HXD.TO keeping this on watch $XLU $TNA $PLUG $GOOGL $IYR http://t.co/hLFf0mEiHq
Tim Ikels
28 Jan 15 07:02:09
*gg* >>> RT @ivanhoff: New all-time highs for Utilities and REITs. Chasing Yield should be in the Winter Olympics. $XLU $IYR
Peter Herman
28 Jan 15 07:01:20
@allstarcharts $IYR good $USO bad
Helene Meisler
28 Jan 15 07:00:56
RT @ivanhoff: New all-time highs for Utilities and REITs. Chasing Yield should be in the Winter Olympics. $XLU $IYR
				
				
By  +Follow August 22, 2013 3:19PM
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