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When to Capitalize on Capitol Hill

By  +Follow October 4, 2013 1:24PM
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With the political wrangling going on in the nation's capitol, Wall Street is once again stuck under a cloud of uncertainty as to the direction of the economy. But even considering what is at stake, the markets have held up relatively well since the shutdown took effect. We asked Toni Turner of TrendStar Trading Group on why and how traders and investors have managed to keep their cool thus far. 

Q: Were you surprised how well the market has held up for the most part after government the shutdown?

Turner: The markets have held up well, considering the stalement in D.C. We have to remember that this is the 18th shutdown since 1977, and differences—for better or worse—have always been worked out. As the famous Winston Churchill quote goes, “The Americans will always do the right thing … after they’ve exhausted all the alternatives.”

That said, the market is skeptical now, if not panicked. Most investors expect the powers-that-be on Capitol Hill to come to an agreement that will reopen the government and keep the federal government rising up to the debt ceiling. Still, it may be an emotional journey to the resolution destination. As such, I’m remaining on the sidelines here, executing only intraday trades. I am not adding core positions right now, because I want to be more convinced this environment offers high-quality buying opportunities. .

EQ: Based on how stocks are treading water right now, is the market positioned to pop on any surprise resolutions? Or is the risk of the effects of a prolonged shutdown greater?

Turner: If we get a resolution in Washington within the next few days, I do believe the market will pop and I believe that because at the moment the Russell 2000, which can lead as a leading indicator for the broader market, is still side-stepping along its all-time highs and has mostly ignored the events going on around it. Now, that may change, but that is what it is doing at this moment in time.

Should the iShares Russell 2000 Index ($IWM) break $104, which is where the 50-day moving average is, then I will pay more attention. So far, the iShares Transportation Average ETF ($IYT) is also holding up very nicely above its 50-day moving average. Even though the market sold off a little more toward the end of the day Thursday, the VIX came off of its highs above 18, so it does show that the market is not yet willing to fall dramatically, which tells me that it’s stronger and more resilient than we think.

EQ: Earnings season kicks off next week. What are some trends or developments that you’re monitoring?

Turner: I’ve been watching price-to-earnings ratios climb for the last two quarters, so for the third quarter, I’m really anxious to see if earnings can catchup with price for the fourth quarter. Typically, the fourth quarter can be one of the best of the year. If interest rates begin to rise—and they have—then I’m interested to see how that will have affected earnings.

EQ: Any sectors or industry groups that have caught your attention right now?

Turner: I like the iShares U.S. Healthcare Providers ETF ($IHF). Healthcare providers are going to be getting more customers by virtue of the Affordable Care Act, and there’s nothing like getting more new customers to help a business grow. For that reason, I’m watching the IHF here. Despite the market’s misery the last three or four days, the IHF has been climbing. If it can remain above the $86-$87 level, then perhaps it keeps going higher. Readers can go to iShares.com and check out the holdings in the IHF and see if there are any names there they’re interested in. The one I’m watching right now is Molina Healthcare, Inc. (MOH) , because it is big Medicaid provider, which will be expanded under the ACA.

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 iwm
TraderH
27 Jan 15 08:52:49
@SunriseTrader so I'm sorry for not following back in case you were wondering! Great trading though with $IWM
Lach 14
27 Jan 15 08:52:31
Russell rallies 1% off the 10:40 am lows, $IWM - just can't keep em down... $SPY http://t.co/PTeJSvl3uB
Carter Mansbach
27 Jan 15 08:51:45
@RedDogT3 @todd_harrison @SovAdjEast Am I the only one seeing the STRENGTH in the $IWM ??
Ron Ellman
27 Jan 15 08:51:31
$IWM hell-bent on closing this morning's gap down. $RUT
Becky Hiu
27 Jan 15 08:51:25
So, $IWM might actually go green. ;)
Jake Catskill
27 Jan 15 08:50:05
$TLT lower, $IWM higher.
Cit Dates
27 Jan 15 08:49:54
SPX CIT Dates: $IWM Trend http://t.co/Va4bPUwMDv
KGTrading
27 Jan 15 08:48:57
$IWM small boys fighting back the best. Still biased for upside breakout .
QQQ Fractalerts
27 Jan 15 08:48:32
What is the $IWM going to do next? Get real time alerts and analysis at http://t.co/YTP7M4f3D1
Ron Ellman
27 Jan 15 08:48:17
Biotechs not participating much in today's large selloff. $IBB $QQQ $IWM $SPY
Gary Porter
27 Jan 15 08:44:55
RT @OMillionaires: $IWM now hitting the highs of the session ~
Perfor Mance
27 Jan 15 08:44:37
Option Millionaires: jimmybob: $IWM now hitting the highs of the session http://t.co/DghCRy38Ao
Options Portfolio
27 Jan 15 08:41:49
$IWM doesn't seem concerned with this sell-off. Today's point of control is developing within yesterday's value area http://t.co/C4ikKeqzKj
Papaoffour
27 Jan 15 08:40:59
Commented on: "Do You Believe Me Now?" http://t.co/1O3R3LSmq7 $DIA $SPY $QQQ $IWM
Andrew Kassen
27 Jan 15 08:40:29
Equity Traders: Do I Hear 9:45-9:47 a.m. on Wednesday? http://t.co/VYiZ7yE6Za $SPY $SPX $IWM $TF_F $ES_F
BA
27 Jan 15 08:39:14
Feels like they should have been able to blast the 10dma $IWM...still the lone soldier above it
OM_freebies
27 Jan 15 08:39:05
Options Training Video: Psychology of Trading Stocks & Options https://t.co/aS8aiALgzI #trading #stocks $qld $uso $uup $uwm $jnj $iwm
El Duque
27 Jan 15 08:39:01
RT @HCPG: If market breaks down, we think it will be led by $QQQ. If it breaks up, for the first time in a long while, think it will be le…
Edward Dowd
27 Jan 15 08:38:41
@andrewunknown Makes total sense that $IWM outperforms here. After all small caps are immune to a strong dollars and a general malaise. πŸ˜‰
HCPG
27 Jan 15 08:38:39
If market breaks down, we think it will be led by $QQQ. If it breaks up, for the first time in a long while, think it will be led by $IWM.
PolgarStocks
27 Jan 15 08:37:41
$USO Company Info Updated Tuesday, January 27, 2015 11:07:23 AM $PCLN $IWM $ERX $USO http://t.co/BY8f3AIp40
Rachel Shasha
27 Jan 15 08:36:54
RT @OMillionaires: $IWM now hitting the highs of the session ~
Oz
27 Jan 15 08:36:45
http://t.co/qqsqiiT9PE will $IWM lead the charge as it did yesterday? $SPY $SPX $QQQ $IBB . First trading hours look similar here.
J.
27 Jan 15 08:36:25
RT @SteadyTrader: Still seeing some relative strength in $IWM vs $SPY so far today
Bshaum
27 Jan 15 08:36:10
RT @SteadyTrader: Feels a little nutty here to add fresh index positions either direction ahead of #FOMC tomorrow $SPY $IWM
Chet Stedman
27 Jan 15 08:33:31
$IWM Liltle Rusty outperforming big time here...what that means? Who knows
Carl Mac
27 Jan 15 08:33:10
$SPY puts $QQQ puts $IWM puts $GOOG puts all monsters today!!!!!!!!!!!!
Options Trader
27 Jan 15 08:32:41
U.S. trade official says Treasury taking lead on currency manipulation: WASHINGTON (Reuters) - ... http://t.co/Jd3TYIDYx0 $SPY $QQQ $IWM
Andrew Kassen
27 Jan 15 08:32:41
Seems the trains are running 2 minutes early today. #Noblizzard #horseshoesandhandgrenades $SPY $IWM $TF_F $ES_F http://t.co/7g9Q4bo5w3
Inside Stock Alerts
27 Jan 15 08:32:41
U.S. trade official says Treasury taking lead on currency manipulation: WASHINGTON (Reuters) - ... http://t.co/iNFVdwxxV0 $SPY $QQQ $IWM
BuckarooTrades
27 Jan 15 08:32:37
RT @OMillionaires: $IWM now hitting the highs of the session ~
Jake Catskill
27 Jan 15 08:32:29
big desks playing $IWM instead of $SPY and $QQQs.
HCPG
27 Jan 15 08:32:04
Interestingly enough, $IWM only one above all major SMAs now. DIA SPY QQQ all caught in flat nets
Option Millionaires
27 Jan 15 08:30:54
$IWM now hitting the highs of the session ~
Evan Medeiros
27 Jan 15 08:30:27
$IWM testing the 118.50 wall. looking like it wants to bust through, but with breadth like this , careful of the fakeout
Investors Hangout
27 Jan 15 08:30:21
chartguy89: IWM Stock Chart $IWM $AGG $UPRO $COH http://t.co/zZB4XJai6D
Becky Hiu
27 Jan 15 08:30:18
$IWM > 118.50 or so can go
Investors Hangout
27 Jan 15 08:30:12
chartguy89: IWM Stock Chart $IWM $AGG $UPRO $COH http://t.co/6mk9oNE1Is
Dwayne Membrane
27 Jan 15 08:27:40
$IWM is only off ~ .8%, far better than any other index.
Bonfire Investing
27 Jan 15 08:26:12
$IWM is the little index that could today.
Jon
27 Jan 15 08:24:25
short $IWM traders: "HA! Today iz day I make ze BEEG monies!" BWAAAHAHAHAHAHAHA
Fully Levered
27 Jan 15 08:24:20
RT @sharkbiotech: $IWM leading for the third day in a row
Billy Rae Valentine
27 Jan 15 08:24:00
@MrMarkette Updated sector breakdown of $iwm. http://t.co/D3QSjuA0tl
David Moadel
27 Jan 15 08:22:56
$QQQ tech stocks getting the Bill Cosby roofie treatment today. $IWM doing okay comparatively speaking... $RUT $COMPQ
Investors Hangout
27 Jan 15 08:22:36
DennyT: EFA Insider Transactions $EFA $IWM $ATHX $SLW.TO http://t.co/WjSOGNYu0q
Investors Hangout
27 Jan 15 08:22:36
DennyT: EFA Insider Transactions $EFA $IWM $ATHX $SLW.TO http://t.co/crABOZVvAN
Dan Rosenblum
27 Jan 15 08:22:13
$IWM leading for the third day in a row
Becky Hiu
27 Jan 15 08:20:52
"@venkysrinivasan: 4317 $IWM Jan 119.5 calls bought .48 cents. RS here."
Cutlass
27 Jan 15 08:19:16
RT @Taarriqq: $SPY day top remain resistance,shot paying, this chart was sent to our folks over weekend $IWM $DIA $QQQ -DAY TRADING http://…
AlignmentInvestments
27 Jan 15 08:19:03
$TF diverging and no lower lows. Often a tell. $ES $NQ $YM $SPY $IWM $QQQ http://t.co/e2WJDVizFW
				
				
By  +Follow October 4, 2013 1:24PM
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