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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
30 Oct 14 07:03:19
$KRE $XLF $FAS good ideas for interest rates rising....problem is will rates rise?..☺
29 Oct 14 18:18:00
$XLF $KRE Green on daily, weekly, and monthly charts. Only one other sector that all green. FAS http://t.co/hVXdyWQ11S
alex demache
29 Oct 14 17:15:36
RT @JakeCatskill: 50 day on $SPY was the perfect bounce, $KRE $XLF starting to price in higher rates, $TLT not buying it yet.
ETF Trends
29 Oct 14 15:20:03
Mass Exodus From #Bank ETFs http://t.co/bbDh4DxAvP #banking #financial #ETF $XLF $VFH $FXO $IAT $KRE $WFC $JPM $BRK.B
Tom Lydon
29 Oct 14 15:15:03
Mass Exodus From #Bank ETFs http://t.co/u4ip9ToXKy #banking #financial #ETF $XLF $VFH $FXO $IAT $KRE $WFC $JPM $BRK.B
Becky Hiu
29 Oct 14 12:43:38
"@ep_capital: Banks finishing strong! $KBE $KRE $ES_F now 1978.00 -2.00"
erik paul
29 Oct 14 12:43:05
@ep_capital Banks finishing strong! $KBE $KRE $ES_F now 1978.00 -2.00
Briefing Trader
29 Oct 14 12:42:17
Banks move to new Hod nearing the closing bell: $KRE now +1.3% $KBE now +1.2%
Jake Catskill
29 Oct 14 12:40:39
$WFC $STT $ZION new highs, bank prop desks bidding up there own stocks. $KRE $XLF.
Keith McCullough
29 Oct 14 12:07:44
Good spot to short more banks $KRE on this rates move
Jake Catskill
29 Oct 14 11:30:38
50 day on $SPY was the perfect bounce, $KRE $XLF starting to price in higher rates, $TLT not buying it yet.
Ben C. Banks
29 Oct 14 11:28:55
Regional banks taking off -- Way above yesterday's highs already. $KRE
erik paul
29 Oct 14 11:25:55
The banks $KBE $KRE trade to Hod here: $ES_F now 1972.00 -8.00
29 Oct 14 11:25:25
$KRE hello.
29 Oct 14 11:22:52
Added some $KRE....kiss it Janet....☺☺
28 Oct 14 17:12:54
KRE 0.84 Stock Charts $KRE K.R. Energy S.p.A. (MCI) Last Updated: 10/28/2014 19:12:57 KRE Stock Chart - 1 Mont http://t.co/ANkPI9o6SJ
I.M. Batty
28 Oct 14 17:01:31
Commented on: "Why Do Banks Want Our Deposits? Hint: It's Not To Make Loans" http://t.co/an8iR6mN42 $KRE $KBE $IAT $KBWB
Craig Garbers
28 Oct 14 13:44:33
RT @SeekingAlpha: Why Regional Banks Are Moving Higher http://t.co/619OggR1FZ $SPY $TLT $KRE $KBE $IAT $IEI $KBWB $RKH $QABA $KRU $KBWR $KRS
28 Oct 14 13:44:08
RT @SeekingAlpha: Why Regional Banks Are Moving Higher http://t.co/619OggR1FZ $SPY $TLT $KRE $KBE $IAT $IEI $KBWB $RKH $QABA $KRU $KBWR $KRS
Seeking Alpha
28 Oct 14 13:43:39
Why Regional Banks Are Moving Higher http://t.co/619OggR1FZ $SPY $TLT $KRE $KBE $IAT $IEI $KBWB $RKH $QABA $KRU $KBWR $KRS
Market Int Center
28 Oct 14 11:06:32
S&P Regional Banking ETF SPDR $KRE Showing Bearish Technicals With Support At $37.09 ( http://t.co/iGEChZc2bA )
28 Oct 14 06:57:31
If $TLT goes down and $IWM goes up, regional banks will outperform in a big way; trend starting $KRE
Ben Silverberg
27 Oct 14 18:41:04
Leading market sectors higher Monday included: $KRE $IYR $IYT $SMH $IBB
Seeking Alpha
27 Oct 14 11:00:03
Why Do Banks Want Our Deposits? Hint: It's Not To Make Loans http://t.co/ORn825gMfo $KRE $KBE $IAT $KBWB $RKH $QABA $KRU $KBWR $KRS
Seeking Alpha
27 Oct 14 10:30:31
Why Do Banks Want Our Deposits? Hint: It's Not To Make Loans http://t.co/1YCmUvKGlQ $KRE $KBE $IAT $KBWB $RKH $QABA $KRU $KBWR $KRS
Thomas Bruni
27 Oct 14 08:11:28
$KRE at an important level here as well. Bulls want consolidation above the first gray area. http://t.co/bKJzH6b4ZE
Michele Schneider
27 Oct 14 07:54:24
@35start I would watch $IYT $ITB $KRE $SMH now and of course, to keep mkt good $XRT has to hold
Becky Hiu
26 Oct 14 18:58:52
$KRE - regional banks snapped back as well but not as well as bigger banks. http://t.co/4f9MTFKejv
26 Oct 14 12:23:14
KRE 0.8475 Stock Charts $KRE K.R. Energy S.p.A. (MCI) Last Updated: 10/26/2014 14:23:13 KRE Stock Chart - 1 Mo http://t.co/M309n9xJCF
25 Oct 14 15:02:04
KRE 0.8475 Stock Charts $KRE K.R. Energy S.p.A. (MCI) Last Updated: 10/25/2014 17:02:05 KRE Stock Chart - 1 Mo http://t.co/VLVkHnCZG9
25 Oct 14 00:52:31
KRE 0.8475 Stock Charts $KRE K.R. Energy S.p.A. (MCI) Last Updated: 10/25/2014 02:52:30 KRE Stock Chart - 1 Mo http://t.co/AdhnrfgTrz
Ben C. Banks
24 Oct 14 07:34:36
$KRE: The sector got weak first (months ago) is relatively weak again. Something to watch.
Superman II
24 Oct 14 07:23:07
Short $KRE but wait for $39 March 2015 $35 puts.
23 Oct 14 14:31:58
Top Shorted Stocks 10/23/14... 20. $PPC 70.05% 21. $XLF 70.02% 22. $KRE 69.68% 23. $MT 69.67% 24. $TXN 69.26% 25. $ITB 69.25%
23 Oct 14 14:31:56
Top Shorted Stocks 10/23/14... 22. $KRE 69.68% 23. $MT 69.67% 24. $TXN 69.26%... http://t.co/7tb3pDPDMh
Market Int Center
23 Oct 14 11:46:48
S&P Regional Banking ETF SPDR $KRE Trading Near $36.94 Support Level ( http://t.co/YIdoLEgbf8 )
Otto Max Investments
23 Oct 14 11:32:35
Bought into $LAD. Out of $KRE. http://t.co/Mi5FBsb8yj
Otto Max Investments
23 Oct 14 10:16:12
Just bought some $KRE.
22 Oct 14 21:44:53
Unusual Opt Vol $T $DOW $DDD $BA $IBM $BX $LUV $KRE $NOK $YELP http://t.co/Try93oTQEC
22 Oct 14 11:57:32
Call/Put Highest % volume changes: Calls: $SMH, $NEE, $ASH, $SNE, $ADHD Puts: $KRE, $WWE, $WU, $LTM, $NOK.
Market Int Center
22 Oct 14 10:48:45
S&P Regional Banking ETF SPDR $KRE Showing Bearish Technicals With Support At $36.72 ( http://t.co/PIlRbB0y6R )
Livevol Community
22 Oct 14 09:00:06
HIGH PUT VOLU $LTM 1871% $TGTX 1786% $FTNT 922% $OC 901% $KRE 755% $TUP 709% $AAP 677% $CHMT 637% http://t.co/gwzPxhnztr
Livevol Community
22 Oct 14 08:49:03
Block Trade: 11:33 $KRE Nov22 32 P (PHLX) 0.07 30000x Today's Full Report: http://t.co/GAgdQYAYhu
By  +Follow June 27, 2013 1:23PM



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