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A New Year Brings New Opportunities for Patient Traders

By  +Follow January 10, 2014 8:45AM
Tickers Mentioned:

The fourth quarter earnings season has officially started, and traders and investors will be watching closely what the market has in store for the coming year. In this week's interview with Toni Turner of TrendStar Trading Group, we discuss areas of the market that could potentially still hold some opportunity despite trading at such elevated levels.

EQ: The New Year has barely gotten underway and we're already in earnings season. The fourth quarter should be interesting to see how the year closed out for many different areas of the market. Are there any in particular that you're watching right now?

Turner: Of course, Alcoa, Inc. (AA) kicks off the earnings season Thursday after the market closes. However, I’m actually watching with interest to see how the retailers finished out the fourth quarter. We can see how that works out in the aggregate by watching the SPDR S&P Retail ETF ($XRT). The XRT was up 38 percent in 2013, and so we know that this past year, consumers held up well.

We also know that the U.S. consumer makes up two-thirds of GDP, so in order for this glorious uptrend to continue in the market—and certainly riding on the back of the improving economic numbers—we need retailers to stay strong.

Now, Costco (COST) just reported that sales rose 5 percent in December, beating expectations of 2.6 percent. I know retailers is a highly diverse industry group, with some suffering like Sears Holdings (SHLD) and JC Penney (JCP) , and some doing well like Macy’s (M) and Costco, but I want to see in the as a whole how retailers and the U.S. consumer are doing since they are a key part of our improving environment. So that will be an indicator to me.

EQ: We're arguably in a different economic environment now that the Fed has given a clear indication on the next step of its tapering. Does this affect your approach to the market for 2014 as compared to 2013?

Turner: With the 10-year bond yielding over 2.90 percent, we’ll have to take the possibility of higher interest rates into consideration. Of course, rising bond yields can negatively affect bond-like equities such as Utilities and REITs, so we will have to adjust our sector evaluations accordingly.

If the Fed, under Janet Yellen, continues to cut back on the bond buying—--then we’ll need to adjust how we think and we’ll have to be even more judicious in the coming year as to which stocks we choose to invest in.

EQ: You said recently that you aren't keen on adding new long positions as of right now. Do you see some softness in the market as of where we currently sit? Do you anticipate a pullback in the near future?

Turner: I’ve been anticipating a pullback for the past three months, and I’ve been wrong for the past three months. I’m going to admit that, but I’m also in good company. I think there’s standing room only in this particular  space.

However,  in the first few days of  January, the market has a spongy texture. We’ve watched oil prices fall rather dramatically since the last two trading days of December to where it currently is, and oil prices have fallen even more from the September highs, which was at $104.67. Right now, WTI crude futures are trading at $91.80.

Brent oil has fallen as well, although not as much. I do realize that we have maybe an oversupply of oil in the U.S., but this dramatic fall seems to indicate more than that.

In addition to  falling oil prices,  we can see China’s weakening posture—by looking at the iShares China Large-Cap (FXI) , which has fallen 10 percent off the December high. Right now, it’s falling below the November lows of $35.76. As the second-largest economy in the world, if China continues  to lose momentum,  we may see Basic Materials fall in concert and it may put a hitch in the giddy-up in the U.S. market.

EQ: What sectors or industry groups are you watching right now?

Turner: One cannot help but see that Healthcare and the Health Care Select Sector SPDR ($XLV) has really moved dramatically higher, and perhaps it can stay in this uptrend for some time to come. Biotechs are getting a lot of play here, though I don’t recommend many  biotechs to novice traders because they can be very volatile. With that said, you can watch the SPDR S&P Biotech ETF ($XBI), . although I would wait for a pullback before I entered.

Almost everything right now needs to pull back. I’m watching the Claymore/Delta Global Shipping ($SEA), which I mentioned last time we spoke. A bunch of small shippers here have done well recently, but this too, needs to consolidate before I’d be interested.

Also, I’m watching the First Trust ISE Global Wind Energy ($FAN), but that too only on a retracement.  I’m pretty much sitting tight here except for a couple of core positions. I want to wait to see what happens with China and with U.S. interest rates.


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 AA
23 Sep 14 07:23:03
$SCTY Buy or Sell? Click here to find out if $SCTY is a buy hold or sell. Watching these stocks. $AAL $AA $GRC http://t.co/GNpjMA1erQ
Stock Wire
23 Sep 14 07:21:06
Alcoa: A Volatile Company With Mixed Expectations. $AA http://t.co/SqNml4adYa
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23 Sep 14 06:49:22
$AA News Alert: http://t.co/y0snImRJSB Updated options view: https://t.co/e4Hac5J8el All options views: https://t.co/OmDYbXnHv6
Seeking Alpha
23 Sep 14 06:49:20
Alcoa: A Volatile Company With Mixed Expectations. http://t.co/gj5TASIDF0 $BA $F $AA
23 Sep 14 06:44:35
$AA I wonder what happened to these clowns who told me I was dumb for shorting this at the highs. http://t.co/IvRbFmyLuK
23 Sep 14 06:36:24
$AA look at the reverse KIRBY on the daily http://t.co/RzsWP4atks - target one hit HL from last week http://t.co/HexBUzfNj8
23 Sep 14 06:31:28
$AA Target #2 reached. Let's see if she bounces here
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23 Sep 14 06:15:20
My focus list for today $SLXP $ASNA $CF $COV $BBBY $KNDI $JRJC $EMES $AA $NXTD $WY $CCL $OTIV $TKMR http://t.co/OHp6IQ4O3n
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23 Sep 14 05:55:21
$AA big day today. If it breaks 15.55 15.50 area might head down to 14.50 sooner than later. I am buyer there
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Major New SECRET Penny Stock Pick Coming Today! Check it out: http://t.co/xbwXVw0Wum $AA $BRSS $SHOO
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RT @TraderHMS: 344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
23 Sep 14 04:25:18
RT @TraderHMS: 344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
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23 Sep 14 04:24:58
RT @TraderHMS: 344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
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Moved Lower BB 1/3 $AA $AAL $ACN $ALK $ATML $CBS $CFX $CNQ $CNX $COG $COH $DAL $DG $DIS $DISH $EDR $ETN $EXG $EXPE http://t.co/70sm4nXAuP
GJ Leibbrandt
23 Sep 14 04:14:28
RT @TraderHMS: 344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
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RT @TraderHMS: 344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
lord of trading
23 Sep 14 04:03:14
RT @TraderHMS: 344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
Helyn Bolanis
23 Sep 14 04:01:37
RT @TraderHMS: 344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
23 Sep 14 03:59:41
RT @TraderHMS: 344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
Trading Cards
23 Sep 14 03:58:54
344: What kind you stocks do you prefer to trade? $FB $GILD $NFLX $XLF $BAC $F $TSLA $DE $S $AA $AAPL http://t.co/XiUmy4dwk4
Sleek Money
23 Sep 14 02:55:58
RBC Capital Cuts Alcoa Price Target to $18.00 $AA http://t.co/tRblWN4ihw
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Alcoa Inc (AA) 15.83 $AA 'Fast Money' Recap: It's A Surprisingly Weak Stock Market at The Street - 20 mins ago http://t.co/FPJ6J1ThWn
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23 Sep 14 00:18:47
RT @SeekingAlpha: Is There Value In Leading Mining Companies? http://t.co/3fxCDZkJqd $VALE $BHP $FCX $RIO $SCCO $CCJ $TRQ $AA $RTPPF
Quantpost Basic Mats
22 Sep 14 23:25:50
$AA News Alert: http://t.co/cxCBHhkWe8 Updated options view: https://t.co/1nAi4t3aTe All options views: https://t.co/OmDYbXnHv6
Seeking Alpha
22 Sep 14 23:25:48
Is There Value In Leading Mining Companies? http://t.co/3fxCDZkJqd $VALE $BHP $FCX $RIO $SCCO $CCJ $TRQ $AA $RTPPF
22 Sep 14 22:19:59
AA 15.83 Stock Charts $AA Alcoa Inc. (NYSE) Last Updated: 09/23/2014 00:20:16 AA Stock Chart - 1 Month http:// http://t.co/eGRtvVzugZ
Walt Sweet
22 Sep 14 20:13:42
RT @jimcramer: What's your view??RT @Jzaafarani: @jimcramer @nyse @TheStreetTV #CramerQ do I sell my $Aa positions or wait for earnings.
22 Sep 14 19:46:42
$AA 9/9/14 was around the last time I posted a chart. Here is how it looks of today. same targets http://t.co/6UrjoennpY
22 Sep 14 19:00:05
22 Sep 14 18:43:29
AA 15.83 Stock Charts $AA Alcoa Inc. (NYSE) Last Updated: 09/22/2014 20:43:45 AA Stock Chart - 1 Month http:// http://t.co/45ZyWmpGKz
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Alcoa Inc (AA) 15.83 $AA Most active New York Stock Exchange-traded stocks AP - Mon Sep 22, 5:03PM CDT NEW YOR http://t.co/g8t4YboE9r
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22 Sep 14 18:38:34
@systemstrader95 Nice job on $AA
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22 Sep 14 16:41:24
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Morning Alert: BlackBerry Ltd (NASDAQ:BBRY), Alcoa Inc. (NYSE:AA), InterOil ... $AA http://t.co/oCpE2oasSw
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Exit in the morning $CAR, $AA
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$aa http://t.co/mepkWkoaaa #investing #options
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http://t.co/QkCFZ8H3V8 Stock_Tracker: $AA News Analogic shares decline after revenue: Sto http://t.co/OeUf6nFxsI http://t.co/QkCFZ8H3V8
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RBC Capital Mkts reiterated Alcoa $AA coverage with Sector Perform and target $18
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$AA Alcoa Inc files Form 8-K (Events or Changes Between Quarterly Reports) SEC Filing.. http://t.co/1fOdKHIvkE
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By  +Follow January 10, 2014 8:45AM

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