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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).

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 xlf
clayton
30 Oct 14 21:37:52
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J.
30 Oct 14 21:03:33
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lookn4wins
30 Oct 14 20:44:42
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Stock Relay
30 Oct 14 20:33:37
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Stock_Tracker
30 Oct 14 20:22:47
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Stock Relay
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Stock_Tracker
30 Oct 14 19:39:46
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clayton
30 Oct 14 19:03:20
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Stephen s
30 Oct 14 18:12:41
RT @stockrelay4: $AMBA Shares Click Here: http://t.co/Jr1t0oM9rC Also See: $TWTR $XLF $MYEC $MS ~
Stock Relay
30 Oct 14 17:57:36
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Stockaholics
30 Oct 14 17:51:46
Our Penny Stock Newsletter Alert On MGON Closed up 112.5% Today! Major News: http://t.co/dvxYQnSJab $XLF $F $FN $MSFT
lookn4wins
30 Oct 14 17:42:32
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IH News Desk
30 Oct 14 17:16:23
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PolgarStocks
30 Oct 14 17:14:38
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Scott Redler
30 Oct 14 15:24:06
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Stan
30 Oct 14 15:22:43
RT @marketminute: Interesting day with $DIA up over 127 and $SMH esp $INTC cracking-new rotation-fins all the rage $XLF and of course $IBB
Darlene S Williams
30 Oct 14 15:10:10
@DSWZONEPICKTICK @ANDROIDPOLICE @SQUARE @INTUIT @SAEINTL @XE @BorsaItalianaIT @NASDAQ $XLF #I NEED TO TRAVEL INTERNATIONALLY FOR EMPLOYMENT
ShortStockVolume.com
30 Oct 14 14:31:23
Top Shorted Stocks 10/30/14 1. $LNC 86.35% 2. $ECA 85.09% 3. $FSL 82.91% 4. $SMH 81.86% 5. $ABEV 81.76% 6. $XLF 80.89% 7. $TSM 80.21%...
ShortStockVolume.com
30 Oct 14 14:31:20
Top Shorted Stocks 10/30/14... 4. $SMH 81.86% 5. $ABEV 81.76% 6. $XLF 80.89%... http://t.co/0cv2Mb5lAd
WallStreetConsensus
30 Oct 14 14:13:25
Index/Sectr $DIA, $SPY, $QQQ, $IWM, $XLB, $XLE, $XLF, $XLI, $XLK, $XLP, $XLU, $XLY, $XRT, $XLV, $IYT http://t.co/VozNpyDc2Z
Jeff Quiggle
30 Oct 14 14:08:23
10-Sector > $XLU $ITB $XLV $XLI $XLP $XLF $XLY $XLK $XLB $XLE Yesterday > $XLU $ITB $XLP $XLV $XLI $XLF $XLK $XLY $XLB $XLE
DennyT
30 Oct 14 13:50:44
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danrocks
30 Oct 14 13:27:18
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TopstepTrader
30 Oct 14 13:17:35
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Darlene S Williams
30 Oct 14 13:07:16
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TV_Trading Ideas
30 Oct 14 12:35:10
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Iskounta
30 Oct 14 12:35:10
$XLF chart: $SPY $SDS $VXX $IWM Multiple problems for financials! . http://t.co/gA3TljD8kb
Sergio Nozal
30 Oct 14 12:22:30
Los sectores financiero y biotecnológico, lideran la subida. $XLV $XLF
Mark Brant €£¥$
30 Oct 14 12:16:47
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Stock Relay
30 Oct 14 12:10:23
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dalestrnad
30 Oct 14 11:53:47
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Excalibur
30 Oct 14 11:39:42
$XLF break out alert!! Long $C $BK $GS $BAC $MS
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30 Oct 14 11:31:00
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Darlene S Williams
30 Oct 14 11:13:05
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Stock Forums
30 Oct 14 11:04:15
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30 Oct 14 10:33:40
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Stock Forums
30 Oct 14 10:12:21
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Spread The Trend
30 Oct 14 09:53:15
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John Michael
30 Oct 14 09:52:56
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BNK Invest
30 Oct 14 09:50:58
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Mark Mansfield
30 Oct 14 09:49:13
RT @marketminute: Interesting day with $DIA up over 127 and $SMH esp $INTC cracking-new rotation-fins all the rage $XLF and of course $IBB
Quantpost Financial
30 Oct 14 09:46:14
$JPM $WFC News: "Vanguard Financials ETF: 10-Year Review $IYF $JPM $WFC $XLF …" http://t.co/2d9VkNpCac Board view: https://t.co/92Nwfr33FV
Seeking Alpha
30 Oct 14 09:46:11
Vanguard Financials ETF: 10-Year Review http://t.co/RJ5lEUFc43 $IYF $JPM $WFC $XLF $VFH
AlphaNotBeta
30 Oct 14 09:31:08
$XLF $KRE want to see these lead.
Market Int Center
30 Oct 14 09:12:10
Financial Select Sector SPDR $XLF Showing Support Near $23.17 ( http://t.co/8TM5oFZMs6 )
Investors Hangout
30 Oct 14 08:51:16
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Lauren Holmes
30 Oct 14 08:46:59
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Investors Hangout
30 Oct 14 08:39:35
clayton: $XLF 23.44 http://t.co/QN99R9OSpX
Investors Hangout
30 Oct 14 08:39:18
clayton: $XLF 23.44 http://t.co/hLrlL6Eh7f
clayton
30 Oct 14 08:33:20
$XLF 23.44 http://t.co/o4n22sLLRu
				
				
By  +Follow October 11, 2013 11:19AM
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