logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

 


When to Capitalize on Capitol Hill

By  +Follow October 4, 2013 1:24PM
Share:
Tickers Mentioned:

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. To read our full disclosure, please go to: http://www.equities.com/disclaimer


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

				
				
By  +Follow October 4, 2013 1:24PM
Share:

Comments

 

blog comments powered by Disqus

 Today's Must Reads

5 Small-Cap Energy with Hedges to Survive Oil's Bear Market


DraftKings and FanDuel: The New Face of Legalized Online Sports Betting

Is the Market Paying the Toll of Tech?

What Will Uber Look Like in the Future?


How Dodd-Frank Divides Political Parties Prior to 2016 Election

 

Apple (AAPL) is expected to announce its latest quarterly earnings next week. As the most valuable company by mark... in Equities.com's Hangs on LockerDome

About us

Equities.com is an advanced financial data portal and social network designed to connect self-directed investors with the world’s most innovative startup and small cap companies. Through our in-depth coverage of small cap markets, comprehensive research and stock valuation reports, state of the art issuer products, and world class events, Equities.com provides the social tools and insight that drive tomorrow’s investment relationships and opportunities.

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

Login or Register

LOG IN