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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
KING ALLIANCE
28 Nov 14 13:47:09
RT @DeweyKnows: @THESTOCKER - careful $IWM rolled over nasty today and that is the market leading indicator: Russell 2000 $TZA $TNA http://…
Carolyn B Miciano
28 Nov 14 13:42:23
Success with option spreads requires adjustments http://t.co/NTm3l74tzy $SPY $QQQ $IWM
Clay Ulman, CFP®
28 Nov 14 13:39:23
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
Iole Humphrey
28 Nov 14 13:37:15
iShares Russell 2000 ETF - $IWM : Nov. 96- 101 put spread trades 12 K times for $0.22.
Sinan Selcuk
28 Nov 14 13:35:49
RT @mpgtrader: $IWM 4 weekly doji's in a row. Lots of indecision or just resting for year end push to the yearly R1 pivot? http://t.co/LIb1…
Uncle Buccs
28 Nov 14 13:15:06
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
Blanco Capital
28 Nov 14 13:13:05
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
Anil
28 Nov 14 13:12:56
“@Karla_Tango: Volume in $IWM on this shortened day topped volume from Wednesday which was in the top 5 lowest volume days since 2006."
D. V. Dend
28 Nov 14 13:12:54
RT @Pok8Rok8: @Pok8Rok8 $IWM, $RUT Sporting same mega-phone pattern with divergences @platypusfoot @DougKass @dv_dend
A. Leach
28 Nov 14 13:11:33
RT @etfguide: Stocks are Up? So are #valuations http://t.co/vJneabSir8 $PRF $VOO $IWM $QQQ $IBB $ICF $MDY
Carolyn B Miciano
28 Nov 14 13:10:19
Guide to Butterfly and Diagonal trades http://t.co/y61JQ5AFJc $SPY $QQQ $IWM
TV_Trading Ideas
28 Nov 14 13:04:29
IWM $IWM http://t.co/4gR8IAcYsJ
Kym L
28 Nov 14 13:03:20
$IWM Just a possibility https://t.co/QnlVYOykd4
ⓢ
28 Nov 14 13:01:41
$IWM http://t.co/jvn28a3dym
Kunpeng Lin (林昆鹏)
28 Nov 14 13:01:36
A Few Quick Observations On Crude $HYG $IWM $QQQ $SPY $USO http://t.co/mKmtzKkqFI
MarketWeight
28 Nov 14 12:55:47
RT @Karla_Tango: Volume in $IWM on this shortened day topped volume from Wednesday which was in the top 5 lowest volume days since the star…
Cutlass
28 Nov 14 12:43:35
RT @BlockTradeAlert: BLOCK TRADE: $IWM 1,748,726 shares @ $116.69 [15:02:38]
Daniel Ward
28 Nov 14 12:37:52
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
Kerry
28 Nov 14 12:36:21
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
David Elsley
28 Nov 14 12:35:14
@KeithMcCullough nothing more than consolidation after a 12+% move off the Oct lows to be followed by new ATHs into year end $IWM #Russell
Samantha Lee
28 Nov 14 12:34:31
How many $OIL $USO $XOM folks will exit their positions & park funds w $SPY $DJIA $IWM - I suspect many, if they want to make $$ that is:)
Yale
28 Nov 14 12:30:48
RT @etfguide: Stocks are Up? So are #valuations http://t.co/vJneabSir8 $PRF $VOO $IWM $QQQ $IBB $ICF $MDY
Karla Tango
28 Nov 14 12:25:12
Volume in $IWM on this shortened day topped volume from Wednesday which was in the top 5 lowest volume days since the start of 2006.
Vincent Paulson
28 Nov 14 12:15:51
RT @KeithMcCullough: For the last 5 weeks, the Russell 2000 closed the week at 1173, 4 times (and closed last wk at 1172) $IWM
Wave Trader
28 Nov 14 12:14:46
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
Henry R.
28 Nov 14 12:11:24
RT @racernic: talk abt indecision in the small caps. $IWM candles week after week=indecision. $RUT http://t.co/JeiyMtMk43
Stockmaven
28 Nov 14 12:09:58
RT @DowdEdward: #Beta $IWM $SPY Smartest Quant on Planet just pointed out that Beta had its worst day of the year today. Bodes well for sto…
David Elsley
28 Nov 14 12:09:07
@JaguarAnalytics likely nothing more than manipulation on a low volume day; $TF_F $IWM both closed above the 20 and above last weeks close
BlockTradeAlert
28 Nov 14 12:02:39
BLOCK TRADE: $IWM 1,748,726 shares @ $116.69 [15:02:38]
Befree
28 Nov 14 12:02:22
RT @NorthmanTrader: Some things you just can't make up: 5 weeks of consecutive closes $IWM http://t.co/Gx4DPViyaJ
ETFguide.com
28 Nov 14 12:02:07
Stocks are Up? So are #valuations http://t.co/vJneabSir8 $PRF $VOO $IWM $QQQ $IBB $ICF $MDY
YourPersonalTrader
28 Nov 14 11:55:39
WALL again? ➡️10d ago, MOMO hit wall $PCLN $YHOO $BIDU $LNKD ➡️...until a pause.. http://t.co/WIb7qVkMlH $QNET $IWM http://t.co/AGWm61Z8YW
Edward Dowd
28 Nov 14 11:54:30
#Beta $IWM $SPY Smartest Quant on Planet just pointed out that Beta had its worst day of the year today. Bodes well for stocks ;)
Edward Dowd
28 Nov 14 11:48:23
$SPY $IWM Hard to tell in indexes today but we are beginning a massive risk off period. Santa came early. This is going to hurt.
TMF FTW
28 Nov 14 11:46:44
Dont everyone sell your $IWM at once ....
Carolyn B Miciano
28 Nov 14 11:41:52
Trading Options doesn't get any more advanced http://t.co/4SIuexyPES $SPY $QQQ $IWM
Melissa
28 Nov 14 11:39:23
RT @DougKass: Russell Index up to its old tricks - moving lower. $IWM
DeweyKnows Trading
28 Nov 14 11:36:06
@THESTOCKER - careful $IWM rolled over nasty today and that is the market leading indicator: Russell 2000 $TZA $TNA http://t.co/yZdMRr6B3O
Northy
28 Nov 14 11:35:19
Some things you just can't make up: 5 weeks of consecutive closes $IWM http://t.co/Gx4DPViyaJ
Jeff Quiggle
28 Nov 14 11:34:13
$MACRO > $QQQ $SPY $IWM $TLT $FEZ $FXI $EEM $GLD $JNK $USO Yesterday > $SPY $QQQ $IWM $FEZ $TLT $FXI $EEM $GLD $JNK $USO
Victor Riesco
28 Nov 14 11:31:44
Weakness in $IWM & Oil Stocks give the mkt ugly distribution day today Up/Down 4% ratio ends 0.1, 10x more stocks down strong today than up.
Richard Gobel
28 Nov 14 11:30:38
$TZA or $IWM continues to show the way. http://t.co/2rqiNGgGof via Scutify
Cw
28 Nov 14 11:22:11
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
mike
28 Nov 14 11:13:50
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
Grizzly Advisors
28 Nov 14 11:11:23
RT @KeithMcCullough: For the last 5 weeks, the Russell 2000 closed the week at 1173, 4 times (and closed last wk at 1172) $IWM
David Miller
28 Nov 14 11:07:16
@JaguarAnalytics How much of that is due to energy and energy service sector stocks? $IWM
Danny
28 Nov 14 11:02:23
And regarding $IWM close... -1.40%.
L.T.
28 Nov 14 10:55:23
Have a feeling Monday is going to be ugly for $SPY $QQQ $IWM.
Stockmaven
28 Nov 14 10:55:14
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
Patrick
28 Nov 14 10:54:30
RT @JaguarAnalytics: While the world is focused on oil, here is how the Russell 2000 $IWM finished the week; This is not normal http://t.co…
				
				
By  +Follow October 4, 2013 1:24PM
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