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Can Traders and Investors Avoid the Fiscal Cliff?


Toni Turner of TrendStar Trading Group shares her thoughts on how to approach the fiscal cliff.

Headlines in financial media are now dominated by the fiscal cliff. While the year-end deadline is no small obstacle, excessive noise coming from Washington can turn any investor into a nervous wreck. Can investors afford to ignore the political jockeying by lawmakers on Capitol Hill?

In this week's interview, asks Toni Turner of TrendStar Trading Group for her thoughts on approaching the fiscal cliff, and if there is anything traders and investors can do to better position themselves from the possible fallout.

EQ: There hasn't been much progress coming out of Washington in terms of resolving the fiscal cliff. Yet, the market had been slowly inching higher last week. Are stocks more optimistic than we think?

Turner: In going through the charts of many of the indices like the S&P 500 (INDEXSP:.INX), S&P 400 (INDEXSP:SP400) and the NASDAQ (INDEXNASDAQ:.IXIC) this past Friday, I saw that many stocks–even though the market itself was flat on the day-were breaking higher and even closing on relative new highs. So yes, some stocks have ignored Washington's posturing and are marching to the beat of their own drums. That said, many sectors are overbought in the short term and as of this Monday, I see signs that quite a few sectors and industry groups, as well as the stocks in them, do look as though they may retrace here.

EQ: We saw some slight movements last week directed by what were essentially inconsequential comments from lawmakers. How sensitive is the market right now to impactful news regarding the fiscal cliff?

Turner: This is definitely a Capitol Hill headline-driven market. The ISM numbers came in a bit weaker than expected, and the market simply took a quick gulp of the current economic numbers, digested them quickly, and then turned back to the fiscal cliff and any comments from lawmakers in Washington. Right now, rumors abound. Some are saying that President Obama is fine with going over the fiscal cliff. Others are declaring that the GOP will permit that as well. I believe right now, as I look at this market, that it is getting disgruntled.

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