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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
StockSpotter
22 Dec 14 10:08:07
$IYR up 0.7% to 78.29 possible bullish reversal? #stocks #options #trading http://t.co/oJT4bli3BE
StockCharts.com
22 Dec 14 09:32:13
Arthur Hill: Three Leading Industry Group ETFs for December $XRT $IYR $XSD http://t.co/IN9xaVP1m1
OneChicago
22 Dec 14 08:23:01
$IYR 20150116 Block Trade: 281 trade. ~$2.2 MM notional value.
Jack
22 Dec 14 07:16:52
RT @seeitmarket: Existing Home Sales: November's data seasonally weak; but -6.1% miss largest M/M decline since November 2011. $XHB $ITB $I…
the Syrup
22 Dec 14 07:12:53
@zerohedge oops, down goes housing again. $iyr $spy
David Settle
22 Dec 14 07:09:54
RT @seeitmarket: Existing Home Sales: November's data seasonally weak; but -6.1% miss largest M/M decline since November 2011. $XHB $ITB $I…
Mother of Sin
22 Dec 14 07:09:33
RT @seeitmarket: Existing Home Sales: November's data seasonally weak; but -6.1% miss largest M/M decline since November 2011. $XHB $ITB $I…
See It Market
22 Dec 14 07:08:22
Existing Home Sales: November's data seasonally weak; but -6.1% miss largest M/M decline since November 2011. $XHB $ITB $IYR $SPY $MACRO
Dividend Master
22 Dec 14 06:37:27
$IYR @ new 7yr high . So many large REITs with dividend yields in the 2+% area now
Market Trader Daily
22 Dec 14 06:33:36
$IYR 78.17 $CODE 33.72 $O 48.70 $FTNT 30.75 $ALL 70.24 $KMX 67.91 $LOW 67.43 $PANW 125.86 $SWK 97.43 $DHR 86.97 open to new highs
Market Int Center
22 Dec 14 05:42:06
Potential iShares DJ US Real Estate $IYR Trade Has 3.29% Downside Protection ( http://t.co/VFlNNU31bd )
ProVesting
22 Dec 14 00:48:02
$IYR: Short Interest in iShares Dow Jones US Real Estate (ETF) Drops By ... http://t.co/ChgsXqjkrM http://t.co/3xfpXVky6y
InterCooler
22 Dec 14 00:41:21
Short Interest in iShares Dow Jones US Real Estate $ETF Drops By 8.8% $IYR http://t.co/ZwM1gaNq08
US Banking News
22 Dec 14 00:25:08
iShares Dow Jones US Real Estate $ETF Short Interest Down 8.8% in November $IYR http://t.co/koKwEaZnIu
ProVesting
22 Dec 14 00:13:04
$IYR: iShares Dow Jones US Real Estate (ETF) Short Interest Down 8.8 ... http://t.co/Tbv7d8iWrc http://t.co/lWstOuwYPw
WKRB News
22 Dec 14 00:11:38
iShares Dow Jones US Real Estate $ETF Short Interest Down 8.8% in November $IYR http://t.co/0sEJ8qrNB1
Alex Gibbs
21 Dec 14 10:26:47
RT @allstarcharts: REITs holding in there nicely again today..... $IYR - there is definitely interest as rates continue to get crushed
Jennifer Levin
21 Dec 14 09:20:48
RT @ChartLabPro: Strongest ETF's by category, $IBB, $ICE, $IHE, $SOXX, $VNQ, $IYH, IHF, $INDY, $IYR, $IHI http://t.co/8kvg0dHAlZ
Chart Lab Pro
21 Dec 14 09:17:57
Strongest ETF's by category, $IBB, $ICE, $IHE, $SOXX, $VNQ, $IYH, IHF, $INDY, $IYR, $IHI http://t.co/8kvg0dHAlZ
Chart Lab Pro
21 Dec 14 09:08:52
30,000 foot global global market overview $HYG, $SPY, $EZU, $FXI, $GLD, $EEM, EWZ, $EWJ, $IYR, $IWM, $AGG http://t.co/ngfaP5GVNt
Jon Boorman, CMT
21 Dec 14 07:01:00
RT @gtlackey: December 19, 2014 Relative Strength Scans http://t.co/BUyNinlNLr $TLT $IWM $QQQ $IHI $IDU $IYR $TASR $BMRN $YHOO $IDXX $ORLY…
innov8v
21 Dec 14 03:49:17
reconfiguring 4 taxes so sold some pos. last week...core system long $SPX, $NDX, $ASHR, $IYR, $XNPT, $FB, $AAPL, $EA, $ACAD, $AAPL, $TSRA
PolgarStocks
20 Dec 14 14:34:34
$IYR Recent News Updated Saturday, December 20, 2014 5:07:26 PM $YPF $TZA $GDXJ $BABA http://t.co/YQs0ABiV90
Rosner Stocks
20 Dec 14 12:32:09
$EA Reviews Updated Saturday, December 20, 2014 2:59:24 PM $IYR $STTK $SSO $DBA http://t.co/BkvnJ8X1WF
Langan Stocks
20 Dec 14 11:31:35
$EEM Opinions Updated Saturday, December 20, 2014 2:03:25 PM $CUBA $IWM $GRCU $IYR http://t.co/XWF4lXK9XH
PolgarStocks
20 Dec 14 10:31:11
$COP Stock Forum Updated Saturday, December 20, 2014 1:07:25 PM $SPXL $SMH $XOP $IYR http://t.co/CgYiuc915R
Rosner Stocks
20 Dec 14 09:29:13
$TVIX Stock Price Updated Saturday, December 20, 2014 11:59:25 AM $UNG $IYR $GDXJ $ABBV http://t.co/RouWQZ37n3
Rosner Stocks
20 Dec 14 09:29:10
$ABBV Short Sales Updated Saturday, December 20, 2014 11:59:25 AM $RIG $IYR $GPRO $SUNE http://t.co/xc6AouJlbD
Langan Stocks
20 Dec 14 08:28:33
$AMAT Stock Price Updated Saturday, December 20, 2014 11:03:25 AM $IYR $EBAY $PG $BP http://t.co/vFjFkPhZBC
Langan Stocks
20 Dec 14 07:28:10
$DOW News Updated Saturday, December 20, 2014 10:03:24 AM $BAC $IYR $AMRN $VDSI http://t.co/dPviE4f9X2
Rosner Stocks
20 Dec 14 07:28:04
$USO Stock Message Board Updated Saturday, December 20, 2014 09:59:24 AM $DISCA $VXX $IYR $ORCL http://t.co/WY70GAttyz
IH News Desk
20 Dec 14 06:43:39
$SLV Opinions Updated Saturday, December 20, 2014 09:11:24 AM $DUST $IYR $UCO $TLT http://t.co/akVbBGfI6T
Langan Stocks
20 Dec 14 05:27:39
$BEAV Short Sales Updated Saturday, December 20, 2014 08:03:25 AM $GPRO $TSLA $IYT $IYR http://t.co/Drtr4UL4dX
Dan Neagoy
20 Dec 14 04:51:10
Weekend Market Commentary ($SPY, $VEU, $TLT, $IYR) - 12/19/14 http://t.co/HdkQCwj9L6 via @thetatrend
PolgarStocks
20 Dec 14 03:25:12
$EWZ Stock Forum Updated Saturday, December 20, 2014 06:07:24 AM $KMI $SMH $RSP $IYR http://t.co/TeX2fnaoUO
PolgarStocks
20 Dec 14 03:25:11
$IYR Stock Message Board Updated Saturday, December 20, 2014 06:07:24 AM $DGLY $VDSI $SAVE $FXI http://t.co/TQqkpcvErt
PolgarStocks
20 Dec 14 02:24:48
$IMSC Filings Updated Saturday, December 20, 2014 05:07:24 AM $IYR $FCX $XOM $EWZ http://t.co/6BCnMzCpHS
Rosner Stocks
20 Dec 14 02:24:16
$TVIX News Updated Saturday, December 20, 2014 04:59:25 AM $XLE $IYR $HYG $XLB http://t.co/yYkXD8ldUl
IH News Desk
20 Dec 14 01:38:09
$MUX Stock Price Updated Saturday, December 20, 2014 04:11:24 AM $IYR $SPXL $CUBA $SSO http://t.co/v3ewkeCjAh
Rosner Stocks
20 Dec 14 00:21:14
$EWA Reviews Updated Saturday, December 20, 2014 02:59:25 AM $DNR $KO $DNR $IYR http://t.co/0sQV5bC1uW
PolgarStocks
19 Dec 14 23:21:35
$BBRY News Updated Saturday, December 20, 2014 02:07:27 AM $SWKS $IYR $HD $GDX http://t.co/WSBFb8RdXg
PolgarStocks
19 Dec 14 22:21:09
$DBA Stock Message Board Updated Saturday, December 20, 2014 01:07:26 AM $QCOM $FXI $ADMD $IYR http://t.co/yaWReobk2x
PolgarStocks
19 Dec 14 22:21:06
$IYR Stock Forum Updated Saturday, December 20, 2014 01:07:26 AM $EEM $EWY $EFA $TLT http://t.co/ZUjYDbtDwA
Rosner Stocks
19 Dec 14 22:18:41
$ABBV Percent Change Updated Saturday, December 20, 2014 00:59:25 AM $XLE $IYR $NG $DGLY http://t.co/iuJRvalm1k
Rosner Stocks
19 Dec 14 20:15:39
$GOOG Recent News Updated Friday, December 19, 2014 10:59:24 PM $IYR $UPRO $PPHM $UUP http://t.co/abdaIrmv5s
G. Thomas Lackey Jr
19 Dec 14 19:43:11
December 19, 2014 Relative Strength Scans http://t.co/BUyNinlNLr $TLT $IWM $QQQ $IHI $IDU $IYR $TASR $BMRN $YHOO $IDXX $ORLY $MDR $CLF
PolgarStocks
19 Dec 14 18:17:09
$ATHN Filings Updated Friday, December 19, 2014 9:07:23 PM $COP $IYR $ETN $ERX http://t.co/jLRu3FGhfx
PolgarStocks
19 Dec 14 18:17:08
$XHB Stock Message Board Updated Friday, December 19, 2014 9:07:23 PM $AMRN $XRT $IYR $EA http://t.co/Phz9N5zW7T
Rosner Stocks
19 Dec 14 18:15:20
$ADMD Reviews Updated Friday, December 19, 2014 8:59:24 PM $ABX $NFLX $VHC $IYR http://t.co/CQbZBaYz3u
Rosner Stocks
19 Dec 14 17:13:39
$MYEC Opinions Updated Friday, December 19, 2014 7:59:24 PM $TSLA $RAD $SAVE $IYR http://t.co/7m7g7SiLlt
				
				
By  +Follow August 22, 2013 3:19PM
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