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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
PolgarStocks
27 Feb 15 03:28:13
$IYR Company Info Updated Friday, February 27, 2015 06:07:29 AM $UUP $GLD $WNTR $GOLD http://t.co/KVVJXoohdp
Rosner Stocks
27 Feb 15 00:21:40
$DNKN Financials Updated Friday, February 27, 2015 02:59:27 AM $TWTR $SMH $EWY $IYR http://t.co/l0Y1b8gfVS
Rosner Stocks
26 Feb 15 23:18:47
$AAPL Reviews Updated Friday, February 27, 2015 01:59:26 AM $GDX $EBAY $O $IYR http://t.co/fwyqiR95gw
PolgarStocks
26 Feb 15 20:15:39
$IJJP Stock Price Updated Thursday, February 26, 2015 11:07:29 PM $GRCU $AAPL $DNKN $IYR http://t.co/2Nm47HPrNe
Rosner Stocks
26 Feb 15 19:13:12
$IEVM Stock Forum Updated Thursday, February 26, 2015 9:59:26 PM $IYR $FNMA $EA $CEHC http://t.co/5nytJovtv6
IH News Desk
26 Feb 15 19:13:11
$ERX Filings Updated Thursday, February 26, 2015 9:11:30 PM $ODP $RSP $IYR $KO http://t.co/M8CmtYys6b
HCPG
26 Feb 15 18:30:32
$IYR down 6 % in last month but some decent sup coming in 77-78 area
Micah McDonald
26 Feb 15 18:17:54
$IYR $75.18 looks like a good entry into this sector...
Rosner Stocks
26 Feb 15 17:11:32
$DRN Investor Opinions Updated Thursday, February 26, 2015 7:59:26 PM $RAX $BOX $USO $IYR http://t.co/q9fGHMIk6H
PolgarStocks
26 Feb 15 16:12:11
$C Company Info Updated Thursday, February 26, 2015 7:07:28 PM $NEM $BLOX $URE $IYR http://t.co/2nzViX7rsv
Langan Stocks
26 Feb 15 16:02:16
$KRED Last Price Updated Thursday, February 26, 2015 6:03:10 PM $DDD $AAPL $GM $IYR http://t.co/4WhB2xtWB9
Langan Stocks
26 Feb 15 16:02:16
$PCLN Financials Updated Thursday, February 26, 2015 6:03:10 PM $DUST $CSCO $IYR $XIV http://t.co/dE39xmiQvE
IH News Desk
26 Feb 15 15:09:35
$ECIG Investor Opinions Updated Thursday, February 26, 2015 5:10:39 PM $OIH $IYR $GE $HAL http://t.co/Ihh6VTWkxO
Langan Stocks
26 Feb 15 14:00:00
$UPRO Financials Updated Thursday, February 26, 2015 4:03:11 PM $TASR $QLD $MTL $IYR http://t.co/cTyXWc6lYk
Rosner Stocks
26 Feb 15 13:06:38
$XLP Percent Change Updated Thursday, February 26, 2015 3:59:27 PM $HAL $IYR $EWG $UA http://t.co/3T1DMrRa5l
Lauren Holmes
26 Feb 15 12:24:03
Focus on strong ETFs going forward $XLP $IYR $XLU. Best risk/reward here. Check our best ideas http://t.co/huaLsH8iDZ
Rosner Stocks
26 Feb 15 12:05:29
$IYR Recent News Updated Thursday, February 26, 2015 2:59:26 PM $XLI $ZIOP $F $CAT http://t.co/UJXB4LhdtU
Langan Stocks
26 Feb 15 11:59:08
$VLO Filings Updated Thursday, February 26, 2015 2:03:11 PM $BTZO $DRYS $BAC $IYR http://t.co/M5BJSQvt5R
PolgarStocks
26 Feb 15 11:07:18
$RSX Last Price Updated Thursday, February 26, 2015 1:06:55 PM $TZA $HYG $UNG $IYR http://t.co/dCPXhZqGnK
Lauren Holmes
26 Feb 15 09:39:25
Focus on strong ETFs going forward $XLP $IYR $XLU. Best risk/reward here. Check our best ideas http://t.co/huaLsH8iDZ
♫♪ Soul Girl ♪♫
26 Feb 15 09:23:46
RT @chessNwine: NEW POST: Dawn of a New Regime http://t.co/z4exgnd5KA $IYR $SRS $TBT $TLT $XLU
Stuart A. Brown
26 Feb 15 08:53:20
"@chessNwine: NEW POST: Dawn of a New Regime http://t.co/6SVp8Qr9RR $IYR $SRS $TBT $TLT $XLU"
Venky Srinivasan
26 Feb 15 08:51:20
"@chessNwine: NEW POST: Dawn of a New Regime http://t.co/F6GJ9rFqKQ $IYR $SRS $TBT $TLT $XLU"
Chess
26 Feb 15 08:49:32
NEW POST: Dawn of a New Regime http://t.co/z4exgnd5KA $IYR $SRS $TBT $TLT $XLU
PolgarStocks
26 Feb 15 08:04:14
$IYR Company Info Updated Thursday, February 26, 2015 10:06:54 AM $SMH $IWM $AVGO $EEM http://t.co/eywrnf13kV
PolgarStocks
26 Feb 15 08:04:14
$RSX Financials Updated Thursday, February 26, 2015 10:06:54 AM $AXP $IYR $V $UNH http://t.co/frm8Te5kW3
IH News Desk
26 Feb 15 08:02:07
$FEYE Company Info Updated Thursday, February 26, 2015 10:10:40 AM $IYR $DUST $IBB $DDD http://t.co/E9rWFWPDU3
Dividend Master
26 Feb 15 07:55:52
$IYR back to early january lows . Seeing bits and pieces of analysts downgrading REIT sector
Langan Stocks
26 Feb 15 07:54:41
$SSO Company Info Updated Thursday, February 26, 2015 10:03:10 AM $IYR $BAC $CSCO $BIAD http://t.co/8fvQqTmMEl
David Blair
26 Feb 15 07:22:31
$IYR breaking. Chart from 2/19 http://t.co/Btl19hU8qt
PolgarStocks
26 Feb 15 07:03:27
$GILD Stock Message Board Updated Thursday, February 26, 2015 09:06:54 AM $GLD $UCO $UNH $IYR http://t.co/zwwubULeRp
Langan Stocks
26 Feb 15 06:53:46
$XLY Stock Forum Updated Thursday, February 26, 2015 09:03:10 AM $SWKS $SSO $IYR $XLK http://t.co/muy9CKjPzA
SogoTrade
26 Feb 15 06:37:42
Just released! SogoTrade’s Morning Call on Today’s Spotlight Stocks $COH $TJX, $IYR, $EWA, $HPQ, $MA, $YGE $TSL... http://t.co/0NRAeOieHv
SogoTrade Options
26 Feb 15 06:31:24
Just released! SogoTrade’s Morning Call on Today’s Spotlight Stocks $COH $TJX, $IYR, $EWA, $HPQ, $MA, $YGE $TSL http://t.co/RQno2IcZVA
Stephen s
26 Feb 15 05:55:16
RT @rosnerstocks: $IYR News Updated Thursday, February 26, 2015 03:59:24 AM $IJJP $SCTY $XLF $MYEC http://t.co/LsKJao9odS
Steven Rabin
26 Feb 15 04:54:22
Real Estate Rotation. US out / non-US in. Compare $IYR vs. $IFGL #REITS http://t.co/dlAKTS2OP2
PolgarStocks
26 Feb 15 03:00:19
$SWKS Reviews Updated Thursday, February 26, 2015 05:06:54 AM $IYR $USO $EWY $TMF http://t.co/DSmV9M8rGQ
PolgarStocks
26 Feb 15 03:00:16
$VLO Reviews Updated Thursday, February 26, 2015 05:06:54 AM $TWTR $RWR $IYR $GILD http://t.co/Ngc4kmm0ar
IH News Desk
26 Feb 15 02:56:38
$MU Percent Change Updated Thursday, February 26, 2015 05:10:39 AM $JNK $V $GOOG $IYR http://t.co/Z2yMOZWlH7
IH News Desk
26 Feb 15 02:56:36
$IYR Percent Change Updated Thursday, February 26, 2015 05:10:39 AM $WMT $MCP $BIOC $CRM http://t.co/i8loGYLmU5
Rosner Stocks
26 Feb 15 01:54:43
$IYR News Updated Thursday, February 26, 2015 03:59:24 AM $IJJP $SCTY $XLF $MYEC http://t.co/LsKJao9odS
IH News Desk
25 Feb 15 23:54:05
$IYR Stock Forum Updated Thursday, February 26, 2015 02:10:45 AM $SMN $CELG $CRM $AKAM http://t.co/iYFhFDNNp3
Todd A. Jobson, Sr
25 Feb 15 22:58:44
RT @SeekingAlpha: Housing Part II: Price-To-Rent Trends Since 2010 http://t.co/tk7S7LfnC2 $IYR $VNQ $DRN $URE $SRS $ICF $SCHH $RWR $KBWY $D…
IH News Desk
25 Feb 15 22:52:53
$IYR Filings Updated Thursday, February 26, 2015 01:10:40 AM $EWZ $UNG $JO $ZGNX http://t.co/CXpCjC3kSA
Langan Stocks
25 Feb 15 22:46:09
$EEM Opinions Updated Thursday, February 26, 2015 01:03:09 AM $ERX $LUV $IYR $SCTY http://t.co/IlQB7eD11V
Seeking Alpha
25 Feb 15 22:17:34
Housing Part II: Price-To-Rent Trends Since 2010 http://t.co/tk7S7LfnC2 $IYR $VNQ $DRN $URE $SRS $ICF $SCHH $RWR $KBWY $DRV $REK $FRI
Rosner Stocks
25 Feb 15 20:51:13
$EWZ Stock Forum Updated Wednesday, February 25, 2015 10:59:24 PM $ZGNX $IYR $CVS $SWKS http://t.co/554JF0z6Zf
Langan Stocks
25 Feb 15 19:43:56
$SWKS Financials Updated Wednesday, February 25, 2015 10:03:08 PM $V $IYR $UVXY $NEM http://t.co/lT6g5wdG2G
PolgarStocks
25 Feb 15 18:50:14
$VTI Stock Price Updated Wednesday, February 25, 2015 9:06:52 PM $EFA $GS $RSP $IYR http://t.co/nIq3KIkEWE
Alpha Maven
25 Feb 15 18:04:52
RT @RiskReversal: Tuesday's Notable Options Activity: $CIEN, $IYR, $MU, $SMH, $SPY, $TLT http://t.co/DvZBsdE5EL cc @OptionsAction
				
				
By  +Follow August 22, 2013 3:19PM
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