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


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Results for SPY
Jefferey Robinson
28 Jul 15 23:00:52
RT @lancejepsen: $SPY $SPX Another Plunging Economic Indicator: The Fed Yammering Index via @WSJecon http://t.co/WBjANnsuj1
msputoptions
28 Jul 15 23:00:09
$SPY possible cloudy resistance coming soon http://t.co/DwUY3wPDmC
Beppe
28 Jul 15 22:58:21
RT @lunatictrader1: Reversal levels July 29. No major changes today. #RevL $SPY $GLD $USO $TLT $EURUSD $FTSE $DAX http://t.co/HR0iJDHuor
FonsieTrader
28 Jul 15 22:56:47
$SPY $SSEC China stocks remain weak as investors focus on the Fed http://t.co/O3xpzE0unJ #china
Kora Reddy
28 Jul 15 22:46:49
when $SPY posts a 1% rise on pre #Fedday ? http://t.co/UEwOpSXu5z $STUDY
Joshua Hayes
28 Jul 15 22:45:55
Stocks Rally ahead of Federal Reserve Statement http://t.co/HicLYs2Pym $STUDY $FED $QQQ $SPY $NDX $COMPQ $SPX $RUT $IWM
Geeks Aid
28 Jul 15 22:36:12
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Alan M.
28 Jul 15 22:35:43
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Dr. Duru
28 Jul 15 22:35:28
%stocks>40DMA=28.7%. An Important Stock Market Turnaround. http://t.co/pZWsuKACsG $SPY $CAT $AAPL $GRUB $SSEC $UVXY #VIX #T2108 $AUDJPY
Pub Media Platform
28 Jul 15 22:35:22
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Tactical Faith
28 Jul 15 22:35:01
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Free Key Fridays
28 Jul 15 22:34:35
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Diane Da Costa
28 Jul 15 22:34:16
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Work Online Mom
28 Jul 15 22:33:47
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
TACG
28 Jul 15 22:32:57
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Critical Systems
28 Jul 15 22:32:39
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Krystal
28 Jul 15 22:32:13
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
EMBERHONEY
28 Jul 15 22:31:54
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
viktor antonio
28 Jul 15 22:31:33
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Junior League
28 Jul 15 22:31:11
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
TheClosingBell
28 Jul 15 22:30:48
The Closing Bell is out! http://t.co/4lEQFZKjUb $EURUSD $GBPUSD $USDJPY $AUDUSD $SPY $TWTR $GPRO $YHOO $LNKD $FB $AAPL $BRD $CAT $WLT $LNKD
Chris
28 Jul 15 22:30:20
RT @StateDave: Call me crazy, but isn't the intraday action becoming a bit more idiotic than normal lately? $SPY
Thomas Ingham
28 Jul 15 22:30:07
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Steph
28 Jul 15 22:29:47
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
seth collins
28 Jul 15 22:29:20
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
scott berthel
28 Jul 15 22:29:14
RT @RyanDetrick: So I made this chart. Financials, tech, healthcare make up 51% of $SPY market cap! Energy and materials <10%. http://t.c…
Mark Stencel
28 Jul 15 22:28:57
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Traffic Management
28 Jul 15 22:28:32
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Michael Moore
28 Jul 15 22:27:55
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Gary Johnson
28 Jul 15 22:27:30
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Emergency Kittens
28 Jul 15 22:27:10
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Jim Berg
28 Jul 15 22:26:53
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
jacob paul
28 Jul 15 22:26:23
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Loom SDK
28 Jul 15 22:26:04
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Carolyn Markey
28 Jul 15 22:25:38
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Ric Hughes
28 Jul 15 22:25:12
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
bmoretech
28 Jul 15 22:24:56
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Houston Rockets
28 Jul 15 22:24:25
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
JETFUELMUSICGROUP
28 Jul 15 22:23:51
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
emergence production
28 Jul 15 22:23:37
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Sherri Ross
28 Jul 15 22:22:44
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
BishopVTCurry
28 Jul 15 22:22:28
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Andrew McDonald
28 Jul 15 22:22:00
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Nikola Labs
28 Jul 15 22:21:43
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Sekou McMiller
28 Jul 15 22:21:23
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Shane Hall
28 Jul 15 22:21:05
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
John Dixon
28 Jul 15 22:20:47
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Max
28 Jul 15 22:20:29
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
Andreau Blanchard
28 Jul 15 22:20:06
RT @philstockworld: Failing Bounce Lines Today - #China Edits our News #Manipulation $SPY $DIA $QQQ $IWM -- http://t.co/2rU7K78pEx http://t…
binaryoptionsocial
28 Jul 15 22:19:44
$MRK active, relative volume: 4.5, 1H, 1:00 AM, #nyse $DJI $SPY http://t.co/RBfA8LcTJ0 http://t.co/RBfA8LcTJ0
				
				
By  +Follow March 27, 2014 1:31PM
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