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Traders Playing the Shutdown Should Avoid Staying too Long

By  +Follow October 11, 2013 11:19AM
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After enjoying a mostly steady summer, investors and traders are now back in the thick of an increasingly volatile market due in large part to the squabbles going on in the nation's capitol. While up-and-down price swings does create more opportunities to find short-term profits, it also creates more chances to give back those profits--if not more. In this week's interview with Toni Turner of TrendStar Trading Group, we discuss her thoughts on the current market environment.

EQ: As we approach the Oct. 17 deadline for the debt ceiling, the market is becoming more susceptible to major swings from the ongoing debates on Capitol Hill. From a trader’s perspective, do you see this as more of a trading opportunity or elevated risk?

Turner: It depends on what timeframe you’re trading on. It’s a great short-term trading opportunity, and by that, I mean day trading, and holding only your most conservative positions  overnight. So, for day traders, I think the recent volatility is a great opportunity to earn short-term gains.

As far as holding high beta names overnight, I am not doing that right now. Until an actual resolution takes place in the Washington, DC deadlock, I am not going to be backing up the truck and packing  big longer-term positions into my portfolio. We have to remember that a lot of Thursday’s up-move consisted of short covering, which drove up equities prices rapidly in addition to the buying.

I am still cautious here, so I will not be purchasing high-beta names until there isn’t a resolution.

EQ: What are a few high-beta names that are prominently in the headlines that you’re staying away from?

Turner: Those names would include Facebook (FB) , Tesla (TSLA) , Google (GOOG) , and other high growth type stocks. Stocks in the social media ETF and the tech stocks that people talk about are good examples of one area. These high-growth or high-beta names typically have high P/E ratios and small or no dividends, so there’s no reason for people to hold them.

Also, most of the people in these high-beta names, which are also called momentum, and recently “cult” stocks, are traders. Of course, traders are very fickle. I know because I am one. If it looks like the market will sell off, , we have no problem selling a stock in a heartbeat.

EQ: The S&P 500 fell to the 1650 area earlier this week but managed to bounce off of it Thursday. A few weeks ago, you said the 1650 area represented a strong support line. Is that still true now?

Turner: It is still true. I would still look at 1650, and would also look at 1670 because we have a strong uptrend line there. at that level . W e wouldn’t want to see either one of those levels  broken again.

EQ: Earnings have just about taken a backseat right now because of what’s going on in Washington. Could this potentially be a good opportunity to find some overlooked value here?

Turner: It could, that is if you want to hold small positions overnight. That said, I am keeping my positions limited. In Toni’s Market Club, during the earnings season, we choose stocks with good potential earnings report that will announce about three weeks ahead. I If the chart pattern is favorable, we may enter that stock on the long side about three weeks before they’re due to report earnings, and hold until just before the earnings date.

We sell it and take profits before the actual announcement. You can attribute this to the old buy the rumors, sell the news tactic. It seems to work pretty well. Again, you have to have the right setup and you have to know about the potential earnings to know if it’s a viable opportunity.

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

Turner: There are so many great technical setups that have come out on Thursday. So many stocks have pulled back to swing lows, and then bounced off support.  This presented us with some fantastic  opportunities. Of course, the stalemate in Washington is holding me back from entering many trades.  Washington is full of headline risk,  and an agreement is not yet a reality.

If we get any kind of agreement over the weekend, I will   tiptoe into some positions. There are some sector ETFs that look interesting to me should we reach an agreement. They include: Financial Select Sector SPDR ($XLF), SPDR S&P Regional Banking ETF ($KRE), Industrial Select Sector SPDR ($XLI), Consumer Staples Select Sector SPDR ($XLP), Utilities Select Sector SPDR ($XLU), iShares U.S. Telecommunications ETF ($IYZ), iShares U.S. Real Estate ETF ($IYR), and PowerShares Dynamic Leisure & Entertain ($PEJ).

Results for xlf
luckypete
16 Apr 14 18:14:01
RT @WallStJesus: 🔥TODAY'S SECTOR HEATMAP -- $SPY $QQQ $XLF $XLK $XLE $XLV http://t.co/mg3GxgDhCD
Keybot the Quant
16 Apr 14 17:00:37
#Keybot the #Quant #algorithm flips #bullish at $SPX 1859. Watch $XLF 21.77. $SPY #WallStreet #etf http://t.co/GTGlgrIffe
JIN & SONNY'S ALPHA
16 Apr 14 16:41:32
Beauty RT @WallStJesus: 🔥TODAY'S SECTOR HEATMAP -- $SPY $QQQ $XLF $XLK $XLE $XLV http://t.co/cJnzu3cq8F
JE$U$
16 Apr 14 16:40:24
🔥TODAY'S SECTOR HEATMAP -- $SPY $QQQ $XLF $XLK $XLE $XLV http://t.co/mg3GxgDhCD
fed-depression
16 Apr 14 16:18:28
Bank stocks are at hilarious levels $xlf $wfc as rates rise eventually earns ngs will get crushed. Only on mark to make believe possible...
Steffen Cairbre
16 Apr 14 14:43:04
$XLF [video] Pisani: Yellen holding your hand http://t.co/ISp2Xd2PzV
WallStreetConsensus
16 Apr 14 14:29:31
Index/Sectr $DIA, $SPY, $QQQ, $IWM, $XLB, $XLE, $XLF, $XLI, $XLK, $XLP, $XLU, $XLY, $XRT, $XLV, $IYT http://t.co/ZmQ43RoN61
Sunrise Trader
16 Apr 14 13:54:42
Candle glance $XLF $IYT $IYR $XLK and more http://t.co/WiCkCLgs0f
Vix Contango
16 Apr 14 12:53:04
@fmoVIX Yup.I'm gonna have to wait a couple of days LOL. This rally is unsupported by the components. $QQQ $IWM $XLF bounced very little
Befree
16 Apr 14 12:40:04
RT @Mella_TA: $XLF - http://t.co/UXyCOFLaGT - If XLF & SPX get over this next hump (tomoz) then look out above, all indices inches away fro…
Medicated
16 Apr 14 12:38:43
RT @Mella_TA: $XLF - http://t.co/UXyCOFLaGT - If XLF & SPX get over this next hump (tomoz) then look out above, all indices inches away fro…
Mella
16 Apr 14 12:33:30
$XLF - http://t.co/UXyCOFLaGT - If XLF & SPX get over this next hump (tomoz) then look out above, all indices inches away from a macd cross
Steffen Cairbre
16 Apr 14 12:24:05
$XLF [video] Earnings Squad: PEP, GS & more http://t.co/hDt9i2yq5c
Rynobolt
16 Apr 14 12:21:35
@traderstewie $BRKB playing with a range breakout too. Largest $XLF component.
Steve
16 Apr 14 12:15:28
@TweetLeni $XLF rallied back to neck line of H&S 4hr
Steffen Cairbre
16 Apr 14 11:50:05
$XLF [video] How Goldman Sachs & Morgan Stanley compare http://t.co/kKx8sAdGtm
Kaneco
16 Apr 14 11:41:38
RT @andrewunknown: $BAC With Earnings Behind, Song Remains the Same: Wedge Breakdown from Bearish Bat PRZ. $XLF $BKX http://t.co/TTSjTBnA3f
Andrewunknown
16 Apr 14 11:40:51
$BAC With Earnings Behind, Song Remains the Same: Wedge Breakdown from Bearish Bat PRZ. $XLF $BKX http://t.co/TTSjTBnA3f
Kaneco
16 Apr 14 11:28:02
Shorting $XLF I call BS on this move.
Palmieri
16 Apr 14 11:18:07
$BAC 15.98 -2.50% $XLF 21.71 +.28%
Dan Nathan
16 Apr 14 11:16:42
@provendirection @EnisTaner closed $MS put spread Fri: http://t.co/HZ5OmR3jb6 & closed $XLF puts friday:http://t.co/BmwA1UrI4P impl move 5%
KRS
16 Apr 14 10:39:51
financials need a strong push higher here or check out which way they're headed (chart attached) $XLF $SPY $ES_F http://t.co/IemdgqLsj3
Timothy Anderson
16 Apr 14 10:31:06
@allstarcharts and the $XLF if +50% for the same time period!!!!
Steffen Cairbre
16 Apr 14 09:46:06
$XLF Surveying Recent Bank Performance; Needless Risk-Seeking Emerges http://t.co/KHz8mGu3Qp
Steffen Cairbre
16 Apr 14 09:40:36
$XLF [video] Secular bull market headed higher: Pro http://t.co/CMR7G0DlRi
Steffen Cairbre
16 Apr 14 09:40:35
$XLF Bank of America: Here’s what investors can expect http://t.co/NSCRmMcF6e
Steffen Cairbre
16 Apr 14 09:18:35
$XLF [video] Cramer's stock to watch: Bank of America http://t.co/HSAro29JHy
Steffen Cairbre
16 Apr 14 09:12:36
$XLF [video] Boutique banking with Moelis & Co. http://t.co/ZpHxmiL4IE
Steffen Cairbre
16 Apr 14 09:12:36
$XLF Goldman Sachs earnings: what investors expect http://t.co/1axRK5QGLk
Shan Shan Xie
16 Apr 14 08:59:21
We may miss the fuzzy suppositions but we shall not completely lose all sense of direction. $XLF $TLT $SPY
Steffen Cairbre
16 Apr 14 08:07:35
$XLF [video] Boutique banking with Moelis & Co. http://t.co/ZpHxmiL4IE
Kyle
16 Apr 14 08:06:44
Banks also trading rough. $BKX down half a percent, $XLF UNCH
Tuan
16 Apr 14 08:04:42
$XLF $FAZ prior support now looks like resistance...
GoldMember
16 Apr 14 08:04:39
$XLF back in the red
BlockTradeAlert
16 Apr 14 07:56:18
BLOCK TRADE: $XLF 2,000,000 shares @ $21.67 [10:56:17]
Financial Skeptic
16 Apr 14 07:43:07
Goldman Sachs Giant Squid Bear Case Scenario $GS, $XLF, $MS, $SCHW, $MQBKY, $AMTD http://t.co/NVvIw2iRJq
Financial Skeptic
16 Apr 14 07:41:03
Goldman Sachs Giant Squid Bear Case Scenario $GS, $XLF, $MS, $SCHW, $MQBKY, $AMTD http://t.co/WTXVTBJXe3
Vix Contango
16 Apr 14 07:29:27
$SPY $XLF hitting the ceiling at 50 dma $XLY $IWM well below 100 dma $QQQ tested 200 dma yesterday Dow theory confirmations everywhere
Steffen Cairbre
16 Apr 14 07:04:08
$XLF Goldman Sachs earnings: what investors expect http://t.co/1axRK5QGLk
Steffen Cairbre
16 Apr 14 07:04:08
$XLF [video] Cramer's stock to watch: Bank of America http://t.co/HSAro29JHy
GoldMember
16 Apr 14 07:03:12
$XLF just went red for the day.
Aaron
16 Apr 14 06:59:55
I'm not trying to play any financials on this bounce...fugly action $xlf
Travis Howard
16 Apr 14 05:38:32
Options activity watch $SPY $BAC $FB SIRI $XLF $QQQ $IWM $VXX $EWJ $KO $RAD $FXI $TZA $INTC Ultimate Options & Stock http://t.co/KhvYtMNqer
marketzone
16 Apr 14 05:19:50
Photo: $XLF short trade setup sent to the Elite Zone members reached first target level. The ETF is below... http://t.co/dHAMkQttYp
Steffen Cairbre
16 Apr 14 05:04:57
$XLF [video] Secular bull market headed higher: Pro http://t.co/CMR7G0DlRi
Steffen Cairbre
16 Apr 14 04:24:03
$XLF Morgan Stanley upgraded to buy from neutral http://t.co/XDrnzQnK0N
Steffen Cairbre
16 Apr 14 04:24:03
$XLF [video] Managing your nest egg http://t.co/XpY1SWPqbv
Ben
16 Apr 14 04:13:12
Financials was good play late 2013-early14, $XLF not anymore imo. Stick with whats working $XLE $XLU
Steffen Cairbre
16 Apr 14 04:12:38
$XLF [video] Bill Nygren's new ideas http://t.co/dwGeIpCqMZ
Steffen Cairbre
16 Apr 14 03:54:35
$XLF Navigating The Icarus Market: Monthly Survey Of The Economy, Rates And Markets http://t.co/ONtx863Z3G
				
				
By  +Follow October 11, 2013 11:19AM
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