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Stocks Edge Back Up: Short Covering or Sustainable Rebound?

By  +Follow June 27, 2013 1:23PM
Tickers Mentioned:

SqueezeThe market opened up the week with a sharp move lower, but has been gradually working its way back up. Is this mini-rally a sign of strength or a trap for bulls? Equities.com asked Toni Turner of TrendStar Trading Group her thoughts in this week's interview, and where she thinks the opportunities are in this market.

EQ: The market got a scare earlier this week sparked by significant concerns coming out of China. Despite some intraday volatility, the major indexes seem to be edging up again. What are your thoughts on the movement so far?

Turner: We have two primary concerns. We have China's potential credit bubble, and we have a sudden rise in interest rates in the U.S. that can potentially give a belly punch to our economy just as it is showing signs of getting on its feet. To me, the move down is understandable, but now we will see if Monday was the so called "bottom" of this move lower on the S&P 500, and if the rebound we are enjoying now is sustainable.

We also had some good news this week with the Case-Shiller index and durable goods orders, as well as other economic reports. Of course, some of the recent bounce in the past few days has been due to a short squeeze. So I don't assume this short term rally is necessarily a signal that everything is OK now. I'll need at least a few more days to see if this is simply short covering or if investors are really getting back into the market.

We have to remember two things: the market typically moves higher heading into a holiday—July 4 is next Thursday—and we are closing out the second quarter, which means there's window dressing right now as we close it out. So next week being a holiday week is going to be shortened and it may be a bit flat, with many institutional traders and investors on vacation. But I believe the week of July 8, we're going to get a reality check.

EQ: Longer-term investors may not like the short-term volatility that we're starting to experience in the market, but for active day traders, does this mean more opportunities to take advantage of?

Turner: Absolutely. Short-term traders like volume and volatility. That's our mantra. We can't make money in a flat market. To that point, the last move down and then the quick rebound off of the low gave nimble traders quite a bit to work with.

EQ: Regional bank stocks have been getting more attention, as you tweeted recently. Is this because they stand to benefit if and when the Fed begins to taper the stimulus program?

Turner: That's part of it. Naturally, if interest rates move higher, banks as a whole, will benefit as they can charge customers higher interest rates on loans. Additionally, the Case-Shiller 20 City index came in this week 12.1 percent improved in home prices over the same period last year. Regional banks typically benefit from improving home prices. Plus, we have an infusion of foreign buyers coming into the U.S., mainly from Asia, who are buying up properties, and I know for a fact that certainly not all of them are paying cash. Many of them are financing these purchases. That stands to benefit regional banks.

Also, if you noticed, regional banks did not fall off a cliff when the market moved lower. If you look at the SPDR S&P Regional Banking ETF (KRE), when the market moved lower, the KRE remained above its 50-day moving average, and many of the banks in that space have moved higher over the last few days.

EQ: What are some other stock sectors and industry groups that look appealing to you? Which ones do you want to avoid?

Turner: I do like the regional banks and the KRE on a pullback to between $33 and $33.25. It jumped up over the last couple of days.

If bond prices actually find a low here, and start to rise in the next few days, I might tiptoe into the iShares Dow Jones US Real Estate (IYR). Mostly though, except for quick trades, I'm standing on the sidelines and I'm waiting for the market to decide what it's going to do next.

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 KRE
US Banking News
19 Sep 14 16:29:22
SPDR KBW Regional Banking $ETF Plans Quarterly Dividend of $0.17 $KRE http://t.co/ED17lmB7fe
Kym L
19 Sep 14 16:28:15
$KRE kinda a nasty Pipe formation
Sleek Money
19 Sep 14 16:23:14
SPDR KBW Regional Banking $ETF Plans Quarterly Dividend of $0.17 $KRE http://t.co/REsg4iBHmR
Nigam Arora
19 Sep 14 13:09:44
Golden Capital
19 Sep 14 11:29:53
$KRE may have about 40 cents to the downside still but $GS seems to have bottomed. http://t.co/ST3IvPVlW3
BNK Invest
19 Sep 14 10:50:23
Video: Friday's ETF Movers: $KRE $GDXJ $TCBI $BXS $BAA.TO $GSS #stocks http://t.co/PiQwPJddvt
19 Sep 14 07:02:28
RT @TraderInPlay: Financials & Banks out-perform in early #trading $XLF $FAS $KRE $KBE #ETFs vs. $SPY
19 Sep 14 07:02:20
RT @TraderInPlay: Financials & Banks out-perform in early #trading $XLF $FAS $KRE $KBE #ETFs vs. $SPY
Briefing Trader
19 Sep 14 06:42:39
Financials & Banks out-perform in early #trading $XLF $FAS $KRE $KBE #ETFs vs. $SPY
19 Sep 14 00:52:03
#aandelen enkele large player accumulatie http://t.co/ArbBp8hltn $KRE $FMER $HALO
Call Me Baloo
18 Sep 14 23:15:49
$KRE http://t.co/x3y9U2khYk
Keith Medlock
18 Sep 14 18:17:19
RT @TomLydon: Not Believing #Yellen, Regional Bank #ETF Pops http://t.co/2jCyZLpOoM #banks #financials #ETFs #Fed $KRE XLF
18 Sep 14 18:05:34
$KRE regional banking etf gearing up https://t.co/D6dqReUKik via http://t.co/eJgBzSEGxE
18 Sep 14 16:17:32
RT @ETFtrends: Not Believing #Yellen, Regional Bank #ETF Pops http://t.co/a7DA9MC5w1 #banks #financials #ETFs #Fed $KRE XLF
ETF Trends
18 Sep 14 16:01:26
Not Believing #Yellen, Regional Bank #ETF Pops http://t.co/a7DA9MC5w1 #banks #financials #ETFs #Fed $KRE XLF
Tom Lydon
18 Sep 14 15:55:15
Not Believing #Yellen, Regional Bank #ETF Pops http://t.co/2jCyZLpOoM #banks #financials #ETFs #Fed $KRE XLF
ETF Godfather
18 Sep 14 15:04:03
Not Believing Yellen, Regional Bank ETF Pops | ETF Trends http://t.co/bNV3sBNNIU $KRE
Seeking Alpha
18 Sep 14 13:50:48
Super Regional Banks Earnings To Surprise On Upside: Sterne Agee http://t.co/bZUgxibPO3 $PNC $FITB $STI $CMA $KRE $KBE $IAT $KBWB $RKH
Michael Samhan
18 Sep 14 12:44:12
$KRE with financials making moves this setup is looking pretty good, maybe a run into positive YTD http://t.co/X9Gg7BJBIe
ETF Trends
18 Sep 14 12:37:50
Schwab Makes Big Commission-Free Additions, $BABA a Big Deal for This ETF, Regional Rebound $KRE $IPO $TTFS $DGRW http://t.co/wSf329ZaAN
BNK Invest
18 Sep 14 12:27:34
Video: Thursday's ETF Movers: $KRE $XME $TCBI $FBP $WLT $MCP #stocks http://t.co/mjfxMsuSJw
Shomik Ghosh
18 Sep 14 10:32:23
Bought some $kre shares @ $40.23 due to rotation into financials and rates rising, stop at 200 ma of $39.5
18 Sep 14 10:05:44
RT @systemstrader95 Long $KRE.
John L. Bair
18 Sep 14 10:02:20
Financials and utilities say higher rates soo... $BAC $C $WFC $PNC $FITB $STI $SCHW $PRU $LNC $XLF $KBE $KRE http://t.co/ihDCBM8pW6
John L. Person
18 Sep 14 09:39:27
This weeks bullish stock picks $ALL, $CB, $TRV & $KRE & the Bearish ones $CMG, $AN, $DLPH & $HES theyre on target http://t.co/lZX561rGqQ
Shomik Ghosh
18 Sep 14 09:35:01
@systemstrader95 haven't checked chart yet but assuming you like something better in $kre than $xlf?
Peter Herman
18 Sep 14 08:25:18
RT @msttrader: $KRE trying to break 5-month trendline: http://t.co/HoeiVtmdaG
Alan Farley
18 Sep 14 08:22:20
$KRE trying to break 5-month trendline: http://t.co/HoeiVtmdaG
Craig Garbers
18 Sep 14 07:57:49
RT @TraderInPlay: Fins/Banks continue to lead as $SPY, $SPX set new ATH prints; $XLF $FAS $KRE $KBE
Briefing Trader
18 Sep 14 07:54:03
Fins/Banks continue to lead as $SPY, $SPX set new ATH prints; $XLF $FAS $KRE $KBE
Andrew Thrasher, CMT
18 Sep 14 07:51:05
Mentioned Regional Banks in my Technical Outlook on Monday. Getting a breakout today (chart) $KRE http://t.co/02GI0kDlNj $$
18 Sep 14 07:37:19
$ZION, $KRE both solid pushes above 200ma. Looking for upside to continue
18 Sep 14 06:46:19
RT @TraderInPlay: Financials with early leadership: $XLF $FAS $KRE $KBE #ETFs out-perform vs. $SPX
Briefing Trader
18 Sep 14 06:42:46
Financials with early leadership: $XLF $FAS $KRE $KBE #ETFs out-perform vs. $SPX
erik paul
18 Sep 14 06:37:16
Banks very strong early; $KRE +1.1% $KBE +0.80%; $SPX $ES_F +5.00
18 Sep 14 04:40:18
Parabolic Sar Sell Signals 2/3 $FCF $FNFV $FOSL $KIOR $KRE $LUK $LXRX $NPBC $OI $PB $RKT $SIGM $SKX http://t.co/6KGJnV5N29
17 Sep 14 17:06:53
$KRE should still be watched. Should've ripped today after the fed.
Schnip's Quips
17 Sep 14 11:54:08
S&P 500 Financials Gain 0.9% Intraday to Highest Since June 2008 -- Bloomberg $XLF $KBE $KRE $VFH $IYF
Dana Lyons
17 Sep 14 11:28:20
Fins are agreeable...nice follow-through to breakout in Broker/Dealers $IAI $MS $XBD $KRE $XLF $KBE
17 Sep 14 08:06:25
$ZION finding strong resistance at flat 200ma. She gets over that and could be off to the races. Regional banks holding well $KRE
17 Sep 14 06:30:13
Ideas from the Move in Bonds http://t.co/PXljhN5pGk $HBAN $KIE $KRE $MET $TLT
17 Sep 14 06:06:15
http://t.co/Vv1sYDyeQn Stock_Tracker: Stock DD Board: SPDR S&P Regional Banking ETF (KRE) 39.37 $KRE http://t.co/pvZAZr8lau
17 Sep 14 06:03:50
SPDR S&P Regional Banking ETF (KRE) 39.37 $KRE KRE, XME, XES, HALO, MLNX, GMM Are Seasonally Ripe To Go Up In http://t.co/aaTzwTFUxY
Market Int Center
17 Sep 14 05:51:36
S&P Regional Banking ETF SPDR $KRE Showing Bullish Technicals With Resistance At $40.05 ( http://t.co/YJI4g18gqT )
16 Sep 14 22:31:16
$KRE regional banks, if rates move up, they make $. Longs at $35+ on any sell off. #DeepValue @OtterWoodCapM http://t.co/ktdZyyQnea
Shan Shan Xie
16 Sep 14 19:26:41
$KRE Position trade idea- Needs to break this downtrend channel~ https://t.co/Qp8LPUrYLZ
Market Int Center
16 Sep 14 09:49:01
Potential S&P Regional Banking ETF SPDR $KRE Trade Targets 4.19% Return ( http://t.co/4QEZqs2DZK )
erik paul
16 Sep 14 09:47:05
NOTE: The banks- $KRE $KBE remains in the red with the $ES_F +13.50 & $SPX bid near Hod
Old Bull Lee
16 Sep 14 09:01:14
Ben Silverberg
15 Sep 14 18:12:30
Leading market sectors lower Monday included: $QQQ $SOCL $KRE $IYR $IWM $XRT $SMH $IBB $XME $RSX $FXI $TAN $KOL $DBA $DBB
By  +Follow June 27, 2013 1:23PM



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