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.

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.


Signup for our daily newsletter and get our best articles emailed right to you!

Results for IYT
Investors Hangout
22 Aug 14 00:19:57
$AKS Tick http://t.co/PR43i0rW7G Also See: $GE $XLU $X $IYT ~
Rosner Stocks
21 Aug 14 23:19:12
$YINN Yield http://t.co/fdlYDG9mJo Also See: $AEO $SLB $IYT $TGT ~
Chasing Stars
21 Aug 14 21:57:29
$XLP Open http://t.co/nzmCfrNT2R Also See: $DRL $AYA.TO $EBAY $IYT ~
Investors Hangout
21 Aug 14 20:52:13
$VXX Stock Forum http://t.co/XaYRhC9EGC Also See: $IYT $FFIV $BAA $DRYS ~
Market Compass
21 Aug 14 20:27:41
$IYT: Cheap Oil Helps Airline Stocks, Transportation ETFs Fly http://t.co/t87JtuaGYD http://t.co/t6xsbGDj7A
Wavepatterntraders
21 Aug 14 20:09:03
$DJT $IYT a new high would suggest caution for the bulls #elliottwave
Wavepatterntraders
21 Aug 14 20:08:39
$DJT $IYT Update to this chart http://t.co/bQ5LJKdnMJ #elliottwave http://t.co/tzk66c1lph
Jeff Quiggle
21 Aug 14 13:39:48
$SFL 3-year high & high close #shipping #oil #drybulk #etc $SEA $IYT
WallStreetConsensus
21 Aug 14 13:18:03
Index/Sectr $DIA, $SPY, $QQQ, $IWM, $XLB, $XLE, $XLF, $XLI, $XLK, $XLP, $XLU, $XLY, $XRT, $XLV, $IYT http://t.co/5pPEXcwy9o
Jeff Quiggle
21 Aug 14 13:15:22
#Transport etf $IYT pull back below all time above rising 10 20 50 200 DMAs $DJT $MACRO http://t.co/5jpgzEPD5W
Market Int Center
21 Aug 14 12:39:16
iShares DJ Transportation Average $IYT Trading Near $150.21 Support Level ( http://t.co/1QYDRd5waL )
Stock Updates
21 Aug 14 12:27:29
$IYT: ETF Outlook: SPDR S and P Transportation ETF (XTN) http://t.co/pARiFPtEzt http://t.co/NQZIE8PxR1
Jeff Quiggle
21 Aug 14 11:33:02
Uptrend! US rail freight week Aug16 #carload +2.8% #intermodal +5.4% http://t.co/EcpxrU7Fj6 9/10 commodities up $IYT $DJT $MACRO
Investors Hangout
21 Aug 14 10:56:23
Emylers: $IYT Up to date company activities and other http://t.co/NaMx0W76uE
Investors Hangout
21 Aug 14 10:56:19
Emylers: $IYT Up to date company activities and other http://t.co/Du28S7jxvA
OTPicks.com
21 Aug 14 10:48:42
http://t.co/hjgLwIcNgz Emylers: $IYT Up to date company activities and other: Emylers http://t.co/yxazXxDIeD http://t.co/hjgLwIcNgz
Jeff Quiggle
21 Aug 14 10:28:49
Hold off on that cigar! #Transports rebuffed short of an all time high with 5 of top 10 $IYT holdings lower intraday $DJT $MACRO
Financial Updates
21 Aug 14 10:28:01
$IYT: Markets Live: Super Tuesday cheers http://t.co/YDxch0QqvV http://t.co/nlJO45xBzx
Emylers
21 Aug 14 10:26:15
$IYT Up to date company activities and other important information about $IYT http://t.co/vZAQ6iNdYy
Investors Hangout
21 Aug 14 10:21:30
$IYT Quotes http://t.co/fHU3h0GAu5 Also See: $AMGN $DRYS $CPRX $GDXJ ~
Rosner Stocks
21 Aug 14 10:20:31
$IYT E.P.S. http://t.co/iEdnzM11lG Also See: $TZA $RSX $TASR $SCTY ~
Jeff Quiggle
21 Aug 14 10:17:00
$SFL 3-year high on 7th higher high above 2-month inv-head&shoulders #shipping $SEA $IYT http://t.co/QqVcVZC50e
Investors Hangout
21 Aug 14 10:01:58
$IYT Market Cap http://t.co/vmzHL0tAKR Also See: $VALE $XOM $EBAY $MCD ~
Jason Norine
21 Aug 14 09:56:54
@jimcramer The 3 sectors you want to see making 52 week highs $XLF, $QQQ, $IYT!!
Chasing Stars
21 Aug 14 09:53:58
$IYT Last Trade http://t.co/Cai2UgVGn8 Also See: $CERN $BITA $USO $PDN.TO ~
Investors Hangout
21 Aug 14 09:33:28
$IPCI Last Price http://t.co/G2JBVIT3hl Also See: $CMG $IYT $PWT.TO $AEM ~
Business Headlines
21 Aug 14 09:28:03
$IYT: [video] Uber hires a lobbyist http://t.co/DGPNoS3K1k http://t.co/HL2SyOMQ9V
Investors Hangout
21 Aug 14 09:16:16
DennyT: MU Insider Roster $MU $INTC $IYT $CRM $FSLR http://t.co/0EyXI4XzVI
Investors Hangout
21 Aug 14 09:16:14
DennyT: MU Insider Roster $MU $INTC $IYT $CRM $FSLR http://t.co/ESCaKQU1Kp
lookn4wins
21 Aug 14 08:46:12
$VWO Parabolic SAR $VWO Most recent stock chart and technical analysis. $OPXA $IYT $FEYE $GTAT $GOOGL $CRM htt http://t.co/XjYZjAENLX
Darlene S Williams
21 Aug 14 08:17:17
RT @ETFtrends: NASDAQ #ETFs Are on Fire, Close Call for Brazil #ETFs, Airlines Keep Transports Flying $QQQ $EWZ $QQXT $IYT $XTN $FEZ http:/…
Chasing Stars
21 Aug 14 08:00:01
$HD Yield http://t.co/ESzGc9gQ7M Also See: $XLF $XLY $IYT $AKS ~
iHangout
21 Aug 14 07:55:07
http://t.co/X6MMwAJjms Stock_Tracker: Xtremepicks Alerts: $IYT Recent News Charting an uneven recovery http://t.co/J8dmiMZ9E8
Financial Headlines
21 Aug 14 07:27:58
$IYT: Housing Market Boosts Stocks on Tuesday http://t.co/46tosfAJ55 http://t.co/FYaX6t7iNp
Investors Hangout
21 Aug 14 07:07:43
danrocks: $HIMX Showing on my streamers $IYT $AMZN $GTAT http://t.co/c1SkMZOA1N
Investors Hangout
21 Aug 14 07:07:29
danrocks: $HIMX Showing on my streamers $IYT $AMZN $GTAT http://t.co/sxzLOInhZS
danrocks
21 Aug 14 06:57:03
$HIMX Showing on my streamers $IYT $AMZN $GTAT $RAD $EWZ http://t.co/T8zDHEJm4N
lookn4wins
21 Aug 14 06:47:26
$GERS 50 Simple Moving Average $GERS Most recent stock chart and technical analysis. $IYT $TMF $SLW $DUST $SPW http://t.co/mrZprBiudO
Investors Hangout
21 Aug 14 06:35:55
$GDXJ Stock Forum http://t.co/ccu1MW3ZQZ Also See: $BRK/B $UNP $MTVX $IYT ~
Rosner Stocks
21 Aug 14 06:30:50
$GDXJ Stock Message Board http://t.co/X2nMrnwXDa Also See: $GLUU $TGT $IYT $UUP ~
Market Updates
21 Aug 14 06:28:04
$IYT: The Transportation Sector In Focus http://t.co/smKpvKXB48 http://t.co/JK0nKNZY58
Investors Hangout
21 Aug 14 06:01:37
$FOLD P/E Ratio http://t.co/parrMnMFa4 Also See: $IPCI $HAIN $IYT $TQNT ~
Investors Hangout
21 Aug 14 05:55:16
$FNMA E.P.S. http://t.co/Ahb6u2Abfm Also See: $MTD $XLK $XLF $IYT ~
Rosner Stocks
21 Aug 14 04:53:30
$EPI Short Sales http://t.co/cLfpZKc7Ny Also See: $MMM $IYT $EA $NEM ~
Investors Hangout
21 Aug 14 04:42:28
$EOG Company Info http://t.co/qrVxn9HVAu Also See: $GILD $SUNE $VXX $IYT ~
Investors Hangout
21 Aug 14 03:30:39
$DRL Market Cap http://t.co/WZgI4dGGRl Also See: $XIV $IBB $IYT $ATHM ~
Business News Now
21 Aug 14 03:27:53
$IYT: Mid-Day ETF Update: ETFs, Stocks Turn Positive as Concerns Over Interest Rate ... http://t.co/qM4wnSPgTT http://t.co/J7VROkLDnf
Stock Forums
21 Aug 14 02:57:08
$DDD Yield http://t.co/pub5pPFHaP Also See: $CENX $IYT $ROST $AEM ~
Chasing Stars
21 Aug 14 02:51:51
$DHI Market Cap http://t.co/1muvfIdZC8 Also See: $EEM $IYT $WEF.TO $TPLM ~
Chasing Stars
21 Aug 14 02:37:07
$DBA Stock Message Board http://t.co/SVgxTDkPtw Also See: $OMEX $RSX $CELG $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.