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Are the Bears Finally Waking Up?

By  +Follow March 27, 2014 1:31PM
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While bulls have held a firm hold on the market for the current run higher to the all-time high, the bears may be finally waking up from their winter hibernation. In this week's interview with Toni Turner of TrendStar Trading Group, we discuss risks to the market's uptrend and whether traders should be playing Russia's volatility right now.

EQ: Since we last spoke, the S&P 500 managed to bounce off the 1,850 support level. Is this an encouraging sign for the market to move higher or are we still testing this range?   

Turner: In the short term right now, the S&P 500 is in a consolidation pattern. It’s deciding whether it wants to break higher above the March 21 all-time high or fall below 1,850, or even 1,840.

The index itself isn’t tradable, but, if you look at a daily chart of the SPDR S&P 500 (SPY) , you can see increased volume on negative days. Those are distribution days, and can suggest a “changing-of-the-guard,” from bulls to bears. You can also see high-volume selling days on the PowerShares QQQ (QQQ) , which represents the NASDAQ 100.

That makes me believe that the bear are awakening from their winter nap — if only for the short-term. Even so, I’m raising some cash now to be ready for any new opportunities that come up.

EQ: You noted that the iShares Russell 2000 (IWM) had approached its all-time high last week. It’s since fallen from that level, but if it can revisit its uptrend, is that a bullish signal with small-caps showing strength like this?  

Turner: The iShares Russell 2000 ETF can act as a great indicator of internal market strength because it tracks small-cap stocks. Recently, the IWM has gapped up at the open each day for the past four days out of five, but then traded downward to close lower at the end of the day. It’s now trading below its 50-day moving average, which is a negative signal.We will monitor the Russell 2000 to see if it can rebound from here or sink lower.

At this moment, the IWM is indicating further weakness in the market, at least for the short term.

EQ: What is the IWM telling you when it gaps up but closes lower on a consistent basis like that?

Turner: It tells me that traders are either short and are covering their positions in orders issued before or at the open. Another reason could be that there are some investors still left in the buy-the-dip mentality, however, there’s just too much supply and there are not enough bulls to absorb the supply.

That would cause a gap up on bullish momentum, but then the bears quickly take over and the bulls can’t win against them. There’s just too much supply.

EQ: There are a lot of market speculators playing Russia ETFs. Is this an area you're looking to or are you avoiding it?

Turner: Many investors left Russia’s stock market before the crisis in Crimea. You could see at the beginning of this year that the Market Vectors Russia ETF (RSX) started to head lower. Russia’s economy has been described as fragile.

If financial sanctions are increased, it could trigger more capital outflows, which would then cause the ruble to depreciate against the euro and the dollar. Russia’s sovereign bond yields would soar, which makes it more expensive for Russia to borrow money.

Now the RSX sold off to just under $21 on March 13 and has rebounded since then, but is hesitating, again. So I would not be a buyer here. The Russian market may deteriorate even more.

EQ: There are a few different types of ETFs for the Russian market. In addition to RSX, there’s the triple-leveraged ETFs like Direxion Daily Russia Bear 3X Shares (RUSS) and the Direxion Daily Russia Bull 3X Shares (RUSL) , but those do come with a lot more risk.

Turner: Right, but I never recommend these because they can be real widow-makers in the wrong hands for inexperienced traders. I do have a small position in the RUSS, but I’ve been doing this long enough and know how much discipline it takes. I’ve seen too many traders get excited and jump into these types of instruments and then get hammered.

These triple-leveraged inverse ETFs can be very volatile. They tend to gap open, sometimes in large price increments, depending on the news. They’re also not meant for holding for more than a day or two. So I really don’t recommend them, especially for inexperienced traders.

EQ: Are there any sectors or industry groups you're watching right now?

Turner: Yes, but I don’t see anything too wonderful. I really haven’t found that much that I like right now. I am keeping an eye on the iShares US Oil Equipment & Services (IEZ) for a pop over $ 67.50.

I’ve gone through a big selection of sectors and there hasn’t really been anything I’ve seen that I like. The only other one that would be interesting to me on a technical basis would be the iShares MSCI Chile Capped (ECH) . It’s slightly overbought now, but it has sold off since its 2013 highs of around $68. It’s now at around $45. It recently made a higher low, however, and it could have some upside from here.

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 SPY
Ryan
22 Sep 14 22:39:18
$SPY cont.. I've been watching this chart for months and the range can't hold much longer. http://t.co/TeoJSxBlq9
DamnGoodTrader
22 Sep 14 22:39:14
Who is Interested in Turning $500 into $5,000 ? Hit Me Up Now : DamnGoodTrader@gmail.com $AAPL $ALKM $BABA $SPY $BAC $FB $TWTR $TSLA $FAS
Ryan
22 Sep 14 22:38:41
$SPY cont... breaking out of long-term wedges either up or down can often be very strong. Stay nimble. .. cont...
Ryan
22 Sep 14 22:37:54
$SPY. something to consider. This rising wedge trapped between top trendline and bottom FIB FAN 50% RET is tightening up. .. cont...
Mike M.
22 Sep 14 22:33:03
@jim_ofthedead gotcha, thx. I usually keep my eyes on the $SPY and $UVXY. UVXY and the VIX seem to act as leading indicators some times.
CodyHindSTA
22 Sep 14 22:28:24
March 18th Day Trading Recap: 11 Points – The Triumphant Return of Volatility! http://t.co/ILT1mIU6DY $ES_F $SPY $SPX
TheClosingBell
22 Sep 14 22:28:05
The Closing Bell is out! http://t.co/rQE910SvNL $EURUSD $GBPUSD $USDJPY $AUDUSD $SPY $TWTR $GPRO $YHOO $LNKD $FB $AAPL $BRD $CAT $WLT $LNKD
LunaticTrader
22 Sep 14 22:20:34
Key reversal levels Sep 23. FTSE 100 turns bearish. $SPY $GLD $USO $TLT $EURUSD $FTSE $DAX http://t.co/Qh7tYJXnhr
Momentum Stocks
22 Sep 14 22:18:54
September 23rd Trading Watchlist http://t.co/WBTbyQ2sci $SPY $NFLX $TSLA $BABA
dj
22 Sep 14 22:15:24
@zippoenergy $SPY puts if you play small, wouldn't go with 2-3x ETF options.. they're illiquid, decay is built in. Long UVXY if loss limit
Nancy Boots Davison
22 Sep 14 22:15:12
@EQSenseTrades Finding most part biggest moves made first 2 hours mkt open then chop. Short $SPY 2nd test 200.13 200P in .80 out 1.32 by 9am
Wouter Van Assche
22 Sep 14 22:06:34
RT @allstarcharts: The potential Failed Breakout & Bearish Momentum Divergence in S&P500 $SPX $SPY the rest here http://t.co/rEYNdR78zx htt…
Daniel Hudson
22 Sep 14 22:00:55
RT @lancejepsen: Scotland Independence Vote Was Rigged Voices Growing $spy $qqq http://t.co/wSBp7s23zU #WorldEconomy http://t.co/C6iFkomgrn
Trading Wisdoms
22 Sep 14 21:58:50
RT @TraderHMS: 226: The most important factor for your trading success $SPY $ES_F $DIA #trading #success http://t.co/AQODDO687M
Trading Wisdoms
22 Sep 14 21:58:10
RT @TraderHMS: 319: Getting stopped is just part of the game #trading #markets #stocks $SPY $QQQ http://t.co/EGEfqDPD8d
♥ @MyOrgone ♥
22 Sep 14 21:55:34
Scrap $AAPL!!! Make 100% per year with our 'Top 10 Hedge Fund' Artificial Intelligence - http://t.co/x7MDlPJXnp $QQQ $SPY
theoptiondon
22 Sep 14 21:50:52
$spy {moon phase theory}: New Moon 9/23/14 http://t.co/PtutpSaXWc
theoptiondon
22 Sep 14 21:49:58
Stocks tend to perform better in the days around the New Moon, while price weakness is often seen in the days around Full Moon $spy $tza
howardlindzon
22 Sep 14 21:45:01
Commented on StockTwits: Elizabeth this is the big one !!! @MichaelBatnick: $SPY A recap of the ones that "felt d... http://t.co/hwqMNMoNz6
Joshua Hayes
22 Sep 14 21:38:16
Commented on StockTwits: "@RyanDetrick: NYSE new 52-week lows up to 158, highest level so far in '14. $SPY... http://t.co/tz2rtySBsw
Livermore's Lounge
22 Sep 14 21:26:35
RT @cometkarov: $MACRO IN #FOCUS $GLD PUTS!!! THE GOLD CRASH!!! #BreakingBullion LONG $SMH $TQQQ $SPY $UUP $TBT $VIX http://t.co/GA1YZ8xP8q
MarketSwingPlayer
22 Sep 14 21:25:27
$SPY Where is price headed? Only losers guess, winners know. Stop being a loser! Cheers :D $ES_F http://t.co/0YRUhIDEK1
BUMBLEBEECHARTS
22 Sep 14 21:25:21
$SPY Greed o meter http://t.co/uUJfC0zjGw
Pete Landry
22 Sep 14 21:25:00
RT @StockTwits: The S&P 500 dropped nearly 1% on Monday. BUT there have been much bigger sell-offs this year --> http://t.co/WtxfOEfqG5 $SP…
Mike M.
22 Sep 14 21:23:49
Curious question to the traders. What's better for betting against the market. $SPY puts? $UVXY calls? $VIX calls? I'm feeling $UVXY calls.
Tommy P.
22 Sep 14 21:22:58
$SPY market ebb & flow. Doesn't go straight up nor down.
MarketSwingPlayer
22 Sep 14 21:22:35
$SPY Where is price headed? Only losers guess, winners know. Stop being a loser! Cheers :D $ES_F http://t.co/NCkyJVfSzN
Brian Barrett
22 Sep 14 21:22:32
RT @ETFdb: Excellent reading here! >> http://t.co/5WuerbixCY >> 3 Reasons to Get More Cautious on Stocks $SPY $SPX $MACRO $FED $STUDY
Livermore's Lounge
22 Sep 14 21:22:09
RT @cometkarov: GAME PLAN $MACRO LONG $VIX $TBT $UUP $USO SHORT $GLD *building equity positions-not buying 'dips' buying a $spy bull! http:…
Fractal Euro
22 Sep 14 21:19:53
What is the $SPY http://t.co/uuLkhwKBUq going to do next? Get real time alerts and analysis.
MarketSwingPlayer
22 Sep 14 21:15:56
$ES_F 1,2,3,4! USMC. Price in cadence on my charts. Too Easy! Cheers Oh-ray! $SPY :D http://t.co/to4AOogfki
Newrise
22 Sep 14 21:06:04
RT @philstockworld: Friday Follies - GOP Saves the Kleptocracy, Will that Give us New Highs? $SPY $DIA $QQQ $AAPL $EWG #iPhone6Plus -- htt…
Stock Legend
22 Sep 14 21:05:00
Buying TWTR Calls Update http://t.co/73T0xjwYgp Fundamentals r weak, but technicals strong. #stockaction #finance #investing $SPY
Larry Lovrencic
22 Sep 14 21:03:13
FREE Stock Market Review Ichimoku, Candlestick & Fibonacci video analysis Sep22 http://t.co/66OHvXpqSv $SPY $SPX #stocks $$
FXTrader Hub
22 Sep 14 21:03:13
FREE Stock Market Review Ichimoku, Candlestick & Fibonacci video analysis Sep22 http://t.co/nI7tLyeafW $SPY $SPX #stocks $$
CloudCharts
22 Sep 14 21:03:13
FREE Stock Market Review Ichimoku, Candlestick & Fibonacci video analysis Sep22 http://t.co/niEZoJxxeV $SPY $SPX #stocks $$
CrackedMarket
22 Sep 14 21:01:26
Was Monday's weak trade bullish: http://t.co/ybR9UiIE7G $SPY $SPX $ES_F
CrackedMarket
22 Sep 14 21:01:22
Was Monday's weak trade bullish: http://t.co/LaQZc6hQW9 $SPY $SPX $ES_F
O T P i c k s . com
22 Sep 14 20:55:51
http://t.co/oHSUax81PW RIPPER: Like them all aks think My $SPY puts: RIPPER http://t.co/ejVLE0E3Wm http://t.co/oHSUax81PW
Jahi Faucette
22 Sep 14 20:53:25
RT @StockTwits: The S&P 500 dropped nearly 1% on Monday. BUT there have been much bigger sell-offs this year --> http://t.co/WtxfOEfqG5 $SP…
StockTwits
22 Sep 14 20:49:25
The S&P 500 dropped nearly 1% on Monday. BUT there have been much bigger sell-offs this year --> http://t.co/WtxfOEfqG5 $SPX $SPY
umesh
22 Sep 14 20:48:25
RT @TraderHMS: 319: Getting stopped is just part of the game #trading #markets #stocks $SPY $QQQ http://t.co/EGEfqDPD8d
PortfolioWorkstation
22 Sep 14 20:45:33
YTD $SPY and $TLT are 85% correlated, but $SPY and $IWM are only 37%! What's going on here?? #trading #crazy #markets http://t.co/wAfQb24And
mike_sb
22 Sep 14 20:45:13
@mike_sb We've been close to 2 of the short signals a few times in the last 9 days. But various filters have blocked their entry. $SPY puts?
Mehmet F. Dicle
22 Sep 14 20:44:29
I wonder how #Russia is going to respond to bombing in Syria... #syria Invade #Ukraine? Markets/futures are still green... $DIA $SPY scary..
mike_sb
22 Sep 14 20:41:35
My $SPX, $SPY, $ES timing model continues in NEUTRAL (Day 9). Today, we went undervalued, by just a couple of index points. No signals yet.
zafar idrisi
22 Sep 14 20:40:52
RT @TraderHMS: 235: Random outcomes and trading edges $SPY $QQQ $EURUSD $AUDUSD #forex $ES_F $GLD $SLV http://t.co/hSgToKDRM3
Live Trading News
22 Sep 14 20:37:46
"@EWTrader33: $196 is my target $SPY"
zafar idrisi
22 Sep 14 20:37:46
RT @SJosephBurns: RT @TraderHMS: 226: The most important factor for your trading success $SPY $ES_F $DIA #trading #success http://t.co/vV3X…
Joe Schmo
22 Sep 14 20:29:15
Why can't bears face reality that although the Economy sucks for most normal ppl...companies have tons of cash & are stronger than ever $spy
				
				
By  +Follow March 27, 2014 1:31PM
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