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Stocks Edge Back Up: Short Covering or Sustainable Rebound?

By  +Follow June 27, 2013 1:23PM
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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
Investors Hangout
30 Aug 14 09:31:38
jim50: $KRE Volume Date=Aug-29-2014 Open=38.84 High=39 http://t.co/6PWZgkD8Z8
Investors Hangout
30 Aug 14 09:31:37
jim50: $KRE Volume Date=Aug-29-2014 Open=38.84 High=39 http://t.co/lkSKZ6o6dC
jim50
30 Aug 14 09:04:02
$KRE Volume Date=Aug-29-2014 Open=38.84 High=39 Low=38.63 Close=38.95 Volume=1062200 http://t.co/PdhzHyfFx8
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$KRE: Market Outlook: Too Much! http://t.co/bm6zsFZ0zG http://t.co/KfiKnW1Vp7
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chartguy89: ABX Stock Chart $ABX $PANW $FLEX $KRE http://t.co/6cUWPQTFTY
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30 Aug 14 08:15:14
chartguy89: ABX Stock Chart $ABX $PANW $FLEX $KRE http://t.co/TTr1bNpP4J
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30 Aug 14 08:13:15
RT @Jake132013: $DRIO Sell? Click here to find out if $DRIO is a buy hold or sell. Watching these stocks. $QLD $PAWS $KRE $HNU http://t.co/…
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30 Aug 14 08:11:50
$DRIO Sell? Click here to find out if $DRIO is a buy hold or sell. Watching these stocks. $QLD $PAWS $KRE $HNU http://t.co/R4JDQjvmtx
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30 Aug 14 08:01:43
DennyT: KRE Headlines $KRE $TWTR $ILMN $AVY $NSPH Opinion http://t.co/LspKglbhpP
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DennyT: KRE Headlines $KRE $TWTR $ILMN $AVY $NSPH Opinion http://t.co/sszDuMBg6G
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danrocks: $FCX On Alert $ISNS $GFI $XLE $MA $KRE http://t.co/hSlnHD0Kte
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30 Aug 14 08:01:19
danrocks: $FCX On Alert $ISNS $GFI $XLE $MA $KRE http://t.co/J8pKbSn2Wu
danrocks
30 Aug 14 07:55:43
$FCX On Alert $ISNS $GFI $XLE $MA $KRE http://t.co/SBS76y1h4S
Market Int Center
29 Aug 14 08:51:52
Potential S&P Regional Banking ETF SPDR $KRE Trade Has 3.46% Downside Protection ( http://t.co/gFZBiLPMyt )
Keith McCullough
29 Aug 14 02:36:58
Yield Spread at its YTD lows = Regional Banks $KRE -4.6% for 2014 as net interest margins compress on that
ETF Trends
28 Aug 14 15:10:19
Secrets of Cyclical Sector #ETFs http://t.co/lf42Zz5Yww #stocks #ETF #jpmorgan $XLF $KRE $XLK $VGT $XLV $EEMA
Tom Lydon
28 Aug 14 15:05:15
Secrets of Cyclical Sector #ETFs http://t.co/WC87bZwjI8 #stocks #ETF #jpmorgan $XLF $KRE $XLK $VGT $XLV $EEMA
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28 Aug 14 14:29:39
$KRE: How Will Fed Tightening Impact Community Banks? http://t.co/n0GR6gSX9s http://t.co/6I3tKUZcoA
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$KRE: Favorite Rising Rates ETFs Rises Again http://t.co/fZCNvyo80O http://t.co/iYEb9Bxk45
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28 Aug 14 13:09:04
Block Trade: 3:53 $KRE Mar20'15 43 P (AMEX) 5.25 6000x Today's Full Report: http://t.co/4OKfB75iEk
Market Int Center
28 Aug 14 09:04:04
Potential S&P Regional Banking ETF SPDR $KRE Trade Has 2.59% Downside Protection ( http://t.co/m6Q5PSsvrd )
Keith McCullough
27 Aug 14 12:18:13
Back to what's been underperforming all yr - early cycle - Russell -0.3% and Regional Banks $KRE -0.7%
OneChicago
27 Aug 14 07:18:01
$KRE Sep Block Trade: 324 trade. ~$1.3 MM notional value.
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26 Aug 14 17:01:54
Leading market sectors higher Tuesday included: $KBE $KRE $IWM $XLE $XRT $GLD $GDX $USO
Financial Headlines
26 Aug 14 13:29:33
$KRE: Badness Brewing for Regional Bank ETF http://t.co/jC8FSQY9qU http://t.co/DL0WSGgKpD
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26 Aug 14 12:32:51
Block Trade: 3:16 $KRE Oct18 38 P (CBOE) 0.61 10000x Today's Full Report: http://t.co/7XhP3qjG04
Jim Koford, CFP®
25 Aug 14 15:53:46
@KymLang I still don't like the head-and-shoulders look that $KRE has.
Al Sabogal
25 Aug 14 07:27:33
$KRE - regionals at moving avg resistance hell...please break thru :-> http://t.co/N0YbL3qpn1
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24 Aug 14 07:29:28
$KRE: ETF Gifts That Keep On Giving http://t.co/tpp96vaBJl http://t.co/yp5L55BWjT
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24 Aug 14 06:53:25
August 22 2014 Bearish 50/200-day MA Crossovers http://t.co/bp4WHcqO9Q $SWN $KRE $DBC $LVMUY $NM $IQNT $RPXC
Colin Macleod
23 Aug 14 15:58:48
Triple-Threat Death Cross Patterns http://t.co/2mKKOvTeTp $SWN $KRE $DBC
ROBERT SIMON
23 Aug 14 09:11:28
@1nvestor The holdings with-in the $KRE are worth exploring. Either the most beaten up or the ones about to BO if your shorter term.
Derald Muniz
23 Aug 14 08:58:10
$XLF $KRE Ratio chart, volume heating up as of late http://t.co/QLHoAN4jV9
				
				
By  +Follow June 27, 2013 1:23PM
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