logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

What to Do During this Tapering Temper Tantrum?

By  +Follow June 21, 2013 9:45AM
Share:
Tickers Mentioned:

In this week's interview with Toni Turner of TrendStar Trading Group, we discuss the market's major sell-off, and where investors may hope to find support in the broader market.

EQ: Stocks are down over 3 percent since Ben Bernanke's press conference on Wednesday. Is this an overreaction from the market or were investors caught off guard?

Turner: I think the market is overreacting, though you could see bonds were falling pretty dramatically Wednesday afternoon as Bernanke was holding his press conference. So we definitely had a warning, and he even told us there was a timeline for slowing bond purchases and mortgage-backed securities. Frankly, the market just didn't like it. I've been using the analogy of a teenager whose getting his or her their allowance cut. It's never fun.

However, Thursday also showed that jobless claims rose, and adding to the angst, was the preliminary data released by HSBC that reported China's PMI slipped to a nine-month low. We also saw Brazil's drop due to their unrest, oil prices falling, and a sense that the world is really, on the whole, is looking at sluggish manufacturing numbers. When you combine those data with Mr. Bernanke's comments, I think a lot of people who have made profits in the market earlier this year may be just throwing up their hands and selling, saying it's enough because they don't want to take the chance of giving their profits back to the market.

EQ: Even with the volatility that we had seen over the last few weeks, the S&P 500 had held firmly above 1600. It broke below that on Thursday. What does that mean to you?

Turner: Well, holding above 1600 was optimal, but below that, I see support at 1580 and 1540. Of course, we want to see the Dow Jones Transportation Average Index and iShares Dow Jones Transportation Average (IYT) to remain at or above current levels at $109.

Certainly, if the S&P 500 drops, we don't want to see it confirmed by the transports as well. I think many people are taking profits from the bull market that we experienced through May, and if we fall another 2 to 3 percent, then investors may return to the market looking for new opportunities.

EQ: Are the volatility ETFs like the iPath S&P 500 VIX ST Futures ETN (VXX) a good place to look at right now?

Turner: The VXX tracks the Volatility Index on an intraday basis, which is good for one or two days of trading, but it's not meant to be used for the long term. If you look at the VXX on a chart that goes back to 2011, you can see it doesn't move in an exact pattern with the VIX over the long term.

EQ: So it's similar to the concerns of using leveraged ETFs in ways they weren't necessarily intended to be used?

Turner: What people have to realize with inverse leveraged ETFs is that they could be good vehicles to be used for day trading and possibly held overnight.

Anyone that gets into ETFs such as the ProShares UltraPro Short QQQ (SQQQ), which is the 3x inverse leveraged ETF that matches up with the Nasdaq 100, or the Direxion Daily Small Cap Bear 3X Shares (TZA), which is the 3x bear for the Russell 2000, need to know that these funds readjust on a daily value. What that means is if you were to hold them for a day or maybe the next day, and they stayed at the same price, your capital would drop because of the daily readjustments. So I would say to hold them no more than three days max.

I know people who have bought them, held them, and lost money just by doing nothing. It's not a good idea because these were not meant to be bought and held for any length of time.

We see inexperienced traders buy these inverse leveraged funds, and then maybe the trade goes against them. So, the trader decides to hold the fund, thinking it will move higher anderase their losses. But you have to realize that the whole time you're holding it, you risk two factors going against you: the movement of the underlying index moving against you, as well as your investment's value moving lower because the ETF is getting readjusted everyday like it's built to. We need to remember that in the hands of people who know exactly how they're built and how they work, these vehicles are fine. For people who don't understand them, they can be very dangerous.

EQ: Which sectors or industry groups look better than most for you at the moment?

Turner: It seems like we're throwing out all the babies with the bathwater right now, so I don't see much I'm willing to take on sectorwise, right now. I am, however, watching three agriculture commodities ETFs. Again, they should be played only by people who understand them. I'm watching right now are iPath DJ-UBS Livestock TR Sub-Idx ETN (COW), Teucrium Corn (CORN), and iPath Dow Jones UBS Grains Total Return Sub-Index ETN (JJG).

We have a drought in the Midwest and corn prices are down. There's more to it than that obviously, and people have to do more of their own research on these ETFs, but they have the potential to move go higher.

Results for IYT
MoneyShow Trading
19 Apr 14 13:34:32
$XLE $IYT $XLU $IWM $XLY Best & worst sector performers so far in 2014 analysis at http://t.co/3Zry4DR8MW table at http://t.co/q7ieGinixo
Traders Expo
19 Apr 14 13:33:46
$XLE $IYT $XLU $IWM $XLY Best & worst sector performers so far in 2014 analysis at http://t.co/S2H2s1qU93 table at http://t.co/gvwFegqYdN
TomAspray
19 Apr 14 13:33:18
$XLE $IYT $XLU $IWM $XLY Best & worst sector performers so far in 2014 analysis at http://t.co/RiAlyfZy5d table at http://t.co/WqiTyAky5Y
MoneyShow
19 Apr 14 13:32:52
$XLE $IYT $XLU $IWM $XLY Best & worst sector performers so far in 2014 analysis at http://t.co/SQmL47v29w table at http://t.co/DuFqrEHxy4
Johnny Pham
19 Apr 14 10:53:07
$SPY $QQQ $DIA $IYT $XOP The Week Ahead: A Spring Breakout for the Economy? http://t.co/nPvYYa73P2 via @MoneyShows
Russell Barbour
19 Apr 14 05:50:09
$UBIC BIG win in weak market!: http://t.co/BhqC7wyC9Y $FTR $RRC $WBMD $CPE $ABX $IYT $CAM $REXX $XHB $RALY $XOP $R $LIVE $HBAN $DVN $UUP
MoneyShow
19 Apr 14 04:42:33
$SPY $QQQ $DIA $IYT $XOP The Week Ahead: A Spring Breakout for the Economy? http://t.co/5L76rR3aZS
TomAspray
19 Apr 14 04:42:13
$SPY $QQQ $DIA $IYT $XOP The Week Ahead: A Spring Breakout for the Economy? http://t.co/NUYDomD83M
Traders Expo
19 Apr 14 04:41:47
$SPY $QQQ $DIA $IYT $XOP The Week Ahead: A Spring Breakout for the Economy? http://t.co/Marv1wvpvv
MoneyShow Trading
19 Apr 14 04:41:21
$SPY $QQQ $DIA $IYT $XOP The Week Ahead: A Spring Breakout for the Economy? http://t.co/r2ycX7SRrr
Stock_Tracker
19 Apr 14 00:14:49
DJ Transportation Average Ishares (IYT) 136.52 $IYT Utilities, Health Care Leading ETF Sectors at The Street - http://t.co/8az0NS4gkg
Damien S. Faucher
18 Apr 14 16:36:35
$IYT The Week Ahead: A Spring Breakout for the Economy? http://t.co/iD2zYUijza
Damien S. Faucher
18 Apr 14 15:30:33
$IYT Investors Watch Rail Traffic Zip Along http://t.co/SiuqfaOxsv
The Fly
18 Apr 14 05:55:10
$IYT ISHARES DJ TRANS AVG: Pivot points: Full Story http://t.co/lCpbpaeI7y
Vconomics
17 Apr 14 19:18:26
First rejection from $IYT's ~$136.75 resistance. Keep an eye on it next week. http://t.co/tLarQP1pi0
G. Thomas Lackey, Jr
17 Apr 14 17:58:31
April 17, 2014 Relative Strength Scans http://t.co/Vpz5qVMysv $DBA $USO $SPY $IEO $IDU $IYT $NBR $XCO $CRR $WFT $APC $PXD
Jeff Quiggle
17 Apr 14 10:04:19
GDP growth rate indicator? 1st 15 weeks 2014 US rail freight up 3.1% versus 2013 http://t.co/mokKJdt6ng $IYT $DJT $MACRO
Jeff Quiggle
17 Apr 14 10:00:52
Trending? US rail freight week Apr12: #carload +7.2% #intermodal +9.3% http://t.co/r4J3O3Utth Up #grain #coal Down #ore $IYT $MACRO
Damien S. Faucher
17 Apr 14 08:31:35
$IYT Seeking Alpha In The Trucking Industry And The Improving Economy http://t.co/1JjpYGD0ij
Seeking Alpha
17 Apr 14 08:16:41
Seeking Alpha In The Trucking Industry And The Improving Economy http://t.co/1bF8cmp4Zw $CNW $HTLD $IYT $JBHT $KNX $ODFL $SWFT $USAK
Damien S. Faucher
17 Apr 14 04:22:25
$IYT [video] 50th anniversary Mustang GT http://t.co/DjRGCb2yq8
Damien S. Faucher
17 Apr 14 04:06:04
$IYT [video] Listen up diesel fans! http://t.co/gZzftbh6UZ
Damien S. Faucher
17 Apr 14 03:49:06
$IYT [video] Winnebago CEO: Beginning of healthy recovery http://t.co/YHZL8zHlp5
Damien S. Faucher
17 Apr 14 03:49:06
$IYT [video] GM consultant Feinberg on potential victims fund http://t.co/pAQYJqvj9V
Jeff Quiggle
16 Apr 14 21:10:17
$UNP bounce above 50 & 20 DMAs to top of 6-week box; #1 holding in #transport etf $IYT http://t.co/v6QfJY7rTE
Alfredo Gilham
16 Apr 14 15:30:05
$IYT [video] GM consultant Feinberg on potential victims fund http://t.co/q1GJpzkXdf
Alfredo Gilham
16 Apr 14 14:33:33
$IYT [video] Winnebago CEO: Beginning of healthy recovery http://t.co/GoUgb3Lsh2
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
Alfredo Gilham
16 Apr 14 12:06:35
$IYT [video] Listen up diesel fans! http://t.co/rxleEeAtNq
Alfredo Gilham
16 Apr 14 09:12:35
$IYT [video] All new Toyota Camry unveiled http://t.co/bHbpMKJcUz
Alfredo Gilham
16 Apr 14 08:42:07
$IYT [video] 50th anniversary Mustang GT http://t.co/PL7gJniU9Y
Alfredo Gilham
16 Apr 14 07:33:34
$IYT [video] All new Toyota Camry unveiled http://t.co/bHbpMKJcUz
Robin Murray MD CFII
16 Apr 14 04:59:27
#DOW $DIA #Transports $IYT have recovered SMA 50 #Hopium for the #Bulls http://t.co/0JfwRTBIRL http://t.co/iYEBoWF9pz
Alfredo Gilham
16 Apr 14 04:08:08
$IYT [video] Tesla's last day in New Jersey http://t.co/bH1HTbA9fT
RileyMusguire64
16 Apr 14 04:02:32
$IYT & $XHB perking right back up again. The stock market has no memory only people do......
Alfredo Gilham
16 Apr 14 04:01:38
$IYT [video] GM very cheap: Nygren http://t.co/a2A1aLn70X
WallStreetConsensus
15 Apr 14 14:13:18
Index/Sectr $DIA, $SPY, $QQQ, $IWM, $XLB, $XLE, $XLF, $XLI, $XLK, $XLP, $XLU, $XLY, $XRT, $XLV, $IYT http://t.co/FvxVrsiXed
Jeff Quiggle
15 Apr 14 10:43:54
US momentum! WTO ups 2014 global trade growth forecast to 4.7%; doubles 2013 rate http://t.co/G2BS6i8BUK $XLI $XLB $SEA $IYT $MACRO
Jaac Crocker
15 Apr 14 04:55:10
4 Stocks still in a good position to short this week: $RCPT $RTEC $DB and $IYT
Best Market Alerts
15 Apr 14 03:33:53
$IYT $XLB Bear cross 10-d x 13-d EMA. Transports bearish turn is not good news for market bulls looking for a bounce
WallStreetConsensus
14 Apr 14 15:56:13
Index/Sectr $DIA, $SPY, $QQQ, $IWM, $XLB, $XLE, $XLF, $XLI, $XLK, $XLP, $XLU, $XLY, $XRT, $XLV, $IYT http://t.co/L6a9k18dV4
max powers
14 Apr 14 12:50:21
$IYT daily, i/t, lost + channels mkt goin sideways to lower for awhile http://t.co/kw050vvkvg
thugtrader
14 Apr 14 11:37:11
Bon soir $iyt
Alfredo Gilham
14 Apr 14 07:43:34
$IYT Volatility Trading Digest - Goose & the Golden Eggs http://t.co/6Ij2bCkD9E
Alfredo Gilham
14 Apr 14 05:22:35
$IYT [video] No proof GM's Barra had knowledge of faulty switch http://t.co/gBq4oQunZm
Moises Cropley
14 Apr 14 02:39:11
$IYT & $XHB perking right back up again. The stock market has no memory only people do......
JP Morgains
14 Apr 14 02:33:21
RT @chessNwine: NEW POST: Late Night Strategy for Monday http://t.co/S342DrhQRr $CPE $IYT $QQQ $R $SPY
Luciano Strand
13 Apr 14 20:16:34
$IYT & $XHB perking right back up again. The stock market has no memory only people do......
FairOaksTrader
13 Apr 14 18:28:09
Stocks still in a good position to short this week: $RCPT $RTEC $DB and $IYT
				
				
By  +Follow June 21, 2013 9:45AM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.