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Trading Sandy: The Calm After the Storm

It has been over a decade since the market has faced an unscheduled shut down due to a major disaster. The destruction left in the wake of Hurricane Sandy has yet to be fully calculated, but will

It has been over a decade since the market has faced an unscheduled shut down due to a major disaster. The destruction left in the wake of Hurricane Sandy has yet to be fully calculated, but will easily be considered one of the worst Americans have ever seen. As Wall Street returns from the two-day disruption, there will certainly be some early jitters that traders and investors will have to get through as the market catches up with the news, both in the U.S. and globally.

We asked Toni Turner of TrendStar Trading Group for her thoughts on watching the market after Hurricane Sandy, and where she’s looking to get a pulse on what traders and investors are thinking.

EQ: The market shut down on Monday and Tuesday because of Hurricane Sandy. What has been the impact of the shutdown so far that you have noticed?

Turner: I’m from Florida, and I’ve been through a lot of hurricanes, and certainly the worst ones deliver far more devastating results than we can imagine ahead of time. That’s just in terms of the destruction to the landscape and to our physical surroundings. When something like this happens, the longer the market is closed and the more global events take place, the more the market has to absorb once it opens up. Once again, I noticed on Tuesday that the euro/dollar futures were down, perhaps because of talks on the possible breakup in Spain.

EQ: With so many critical developments going on with the market, in terms of earnings, the election, and so on, does disruption to normal trading add more uncertainty and volatility for investors and traders?

Turner: This brought back memories of when the market re-opened after 9/11. Of course, this is an entirely different situation, but what we did back when the market opened, we didn’t sell our positions. We simply maintained the stops we had in place. then was we knew where our stops were on each position.The important thing to do, of course, is to not become fearful and to not become panicky because that never leads to good results. So I suggest that people know where their stops are in these situations.

Obviously, money has been coming out of this market since the end of September. All we have to do is look at the chart of the S&P 500 to see that outflows have taken place. it has happened. I, myself, am mostly in cash and I’m glad I am. However, the last thing to do is to panic. You just need to know where your stops are, and typically when the market gaps down, many times it will reverse and start up for at least a short period of time.

EQ: We’ve seen from major hurricanes in recent years, certain areas of the market are more affected than others. Do you plan to make any moves based on Hurricane Sandy?

Turner: I’ve been watching the United States Gasoline (UGA), and that’s taken quite a dive lately. I’m watching that to see if there was any potential for a long play there, and it’s already started up a little bit. Another ETF that I’m watching is the United States Oil (USO).

Many times, home improvement stocks like Lowe’s Co. (LOW) and Home Depot (HD) will get a pop during a hurricane because people will have to repair their homes once the storms are over. These plays can be short lived though, and this storm was anticipated, so there has already been some play in these ETFs and stocks along those lines. I don’t usually play insurance stocks, and sometimes they surprise me by the way they move act during these storms, so I’ll leave that up to someone else.

EQ: Are there any other groups that you’re watching right now?

Turner: I’m still watching Health Care Select Sector SPDR (XLV), which has pulled back here. I’m keeping an eye on it to see if it can stay above the 50-day moving average. I’m also watching the PowerShares DWA Emerging Markets Technical Leaders (PIE) for a potentially longer-term trade, but I’m not necessarily in the a buying mood right now. I prefer to stay mostly in cash until the election is over.

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