In this week's interview with Toni Turner of TrendStar Trading Group, we discuss the seemingly resilient market and the rude awakening that may be in store once summer is officially at an end.
EQ: Tension over the situation in Syria is steadily increasing. How has it affected the market so far based on your observations?
Turner: I’ve been watching the CBOE Volatility Index (VIX) this week for signs of fear, but I don’t see too much yet. The VIX is hanging between 16 and 17 for most of this week, but it’s not climbing. So the pattern I see tells me that the market is anxious but it’s not panicked. In fact, the market is surprisingly resilient in the face of all this. Of course, part of this comes on the heels of the delays stemmed from the British and French seeking parliamentary agreements to commit military actions in Syria. It seems that with the delays and uncertainty about the potential actions that will take place, the market has been just brushing it off.
On Thursday, the market was just moving along like one would think it would, with low volume the week before a holiday.
EQ: You’ve discussed before that the market typically likes to edge up heading into long weekends.
Turner: Right. The market likes to go up before every holiday except St. Patrick’s Day, and that’s because it’s towards the end of the first quarter.
EQ: For the most part, the market has remained fairly quiet but the Fed’s tapering has been the dominant storyline as some speculate that it may begin as early as September. With so many headwinds starting to reemerge and market activity expected to pickup very soon, how are you approaching the market right now?
Turner: I’m treading very slowly right now in this market because of the threat of military action in Syria, the QE stimulus punch bowl starting to drain, and the emerging markets sinking into crisis mode. I suspect the “real fun” is going to start after the long weekend.
Often times, I will focus on sectors I really like, but in September, which can be very volatile, I’m going to cherry pick companies that I know have good fundamentals as well as technicals, and also show a good potential for earnings growth, as well as attractive dividends. I am planning to diversify more across the board and also keep some powder dry.
EQ: What sectors are you currently watching?
Turner: Naturally, right now I’m watching the energy sector and the United States Oil ($USO), as well as keeping an eye on the Energy Select Sector SPDR (XLE) and the equities-driven ETFs in that sector.
. I’m also watching the PowerShares Dynamic Media ($PBS), which I’ve discussed before.
The one I really like right now, however, is the PowerShares Dynamic Pharmaceuticals ($PJP), which is in a dandy uptrend supported by a rising 50-day moving average. If it can continue this trend, I will remain interested in healthcare as we go into the final quarter of this year.
Also, I’m looking at three Telecoms, though I don’t like the iShares Dow Jones US Telecom ($IYZ) right now because it’s disorderly. . I am, however, watching three of its component stocks, CenturyLink, Inc. (CTL) , Crown Castle International Corp. (CCI) , and SBA Communications Corp. (SBAC) .