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Are the Bears Finally Waking Up?

By  +Follow March 27, 2014 1:31PM
Tickers Mentioned:

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
22 Oct 14 15:49:54
$NK_F $NKY Nikkei Futures video 10/22 http://t.co/OhMEsXhst7 @ EWF http://t.co/RIbXoe1Ieh $SPY $QQQ http://t.co/gQ2MEsT0sz
El Duque
22 Oct 14 15:49:43
Soon-ish may be a comin' // RT: took out 1875. Left a gap & VPOC @ 50-51. 50 still cVPOC. I imagine we revisit this soon-ish. #ES_F $SPY
22 Oct 14 15:49:17
@lbhi_services @PipsToDollars thanks brother but pips stop following the best $spy trader
Options Trader
22 Oct 14 15:48:58
3:39 pm $SPY Market Trend Down $193.04 Gain $.43
Options Trader
22 Oct 14 15:48:34
3:00 pm $SPY Market Trend UP $193.68 Gain $.06
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22 Oct 14 15:48:03
12:18 pm $SPY Market Trend Down $194.08 Gain $1.17 http://t.co/spa06ZvkPM
LinkPlug Demo
22 Oct 14 15:47:59
@OptionsPlayer23: $SPY check out our alerts from the room today > http://t.co/aYJXEY6qmk http://t.co/c3J3Ryi2l0
Options Trader
22 Oct 14 15:47:02
9:30 am $SPY Market Trend UP $194.38 Gain $.53
Options Trader
22 Oct 14 15:46:30
$SPY check out our alerts from the room today https://t.co/v2gfCKNbZw
TV_Trading Ideas
22 Oct 14 15:39:24
Market Facilitation Index (MFI) $SPY http://t.co/uzJwy4aqHj
Bay Lounge
22 Oct 14 15:39:06
Stornoway Diamonds Severely Undervalued: What do you think? Read here: http://t.co/IHezf5p0Dd $dia $spy $swy $gld
22 Oct 14 15:37:27
RT @NorthmanTrader: Ursus Interruptus: The key to this market http://t.co/Uy4YigdZlI … $SPX $SPY http://t.co/WqrCM8tPj6
Tobin Conley
22 Oct 14 15:34:45
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
Don McNeill
22 Oct 14 15:33:39
S&P 500 Advance Decline $SPY $TNX $SPX small pullback. Mixed sigs. Trendline, 1925 Support ?? Daily Charts http://t.co/fGlwCIMSBZ
Don McNeill
22 Oct 14 15:33:13
S&P 500 Advance Decline $SPY $TNX $SPX internals Zero, Pos. Watchig for Lower High ? ATR turns at, before Uptrend ??? http://t.co/HIMsVTzkF9
Ben Franklin
22 Oct 14 15:30:52
RT @nanexllc: I see JPM agrees with us about the alarming drop in eMini liquidity $ES_F $SPY http://t.co/jP1G8ypNMD
Samantha Lee
22 Oct 14 15:30:00
please stop causing people to lose money and resign @jimcramer $SPY $SPX
Steve (wordjones)
22 Oct 14 15:28:06
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
Ron Rowland
22 Oct 14 15:25:55
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
Jeff Quiggle
22 Oct 14 15:25:11
Native Texan 2.0
22 Oct 14 15:23:51
@Mark4124NH @MrTopStep $SPY 193.30 in AH lol
22 Oct 14 15:23:44
State Employees CU
22 Oct 14 15:23:39
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
Native Texan 2.0
22 Oct 14 15:23:23
$SPY 193.30 in AH lol
Samantha Lee
22 Oct 14 15:23:18
Only dips buy dips when the $VIX rips. $SPY $SPX @MadMoneyOnCNBC @jimcramer
Samantha Lee
22 Oct 14 15:21:52
So the $VIX and $TRIN r up. Pure uncertaintiy in the market, and Mr Cramer wants people to buy (his shares?) CRAZY $SPY $SPX @MadMoneyOnCNBC
Colin Macleod
22 Oct 14 15:20:32
T3 Live Daily Recap: RDR Tactics http://t.co/1X3AMjiPXl $SPY $IWM $XLE $FAS $BABA $TSLA $TWTR $FB $BA $CMG
Samantha Lee
22 Oct 14 15:20:15
Peter Schiff: A Messy Exit Is A Given; Ending QE Will Plunge U.S. Into Severe Recession. Yet it will end. $SPY $SPX http://t.co/RfOkA7xl6B
Chris Perruna
22 Oct 14 15:19:13
RT @KimbleCharting: Does this mean that a bear market is near? 4 of top 10 rallies this year, taken place this month! $SPY $QQQ $IWM http:/…
University School
22 Oct 14 15:19:13
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
Kym L
22 Oct 14 15:16:05
$SPY Just an observation chart https://t.co/1xhOlIT2KN
Repower at Home
22 Oct 14 15:14:37
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
22 Oct 14 15:13:21
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
22 Oct 14 15:11:37
$SPY $191.54 possible tomorrow and then start going up ?
22 Oct 14 15:11:37
"@FinanceTX: Chain Store Sales Growth Worst Since 2010 (Or Why "The Fed Turned The Market Around") http://t.co/TBm2EifOAS " $ES_F $SPY $XRT
Nasdaq Alerts
22 Oct 14 15:10:43
New $SPY alerts http://t.co/DKB8ZfFURY have recently been posted. Check them out now.
Mike Lee
22 Oct 14 15:09:48
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
22 Oct 14 15:08:41
RT @mwonder74: $SPY $192.85 means still need good size red dump :-) >> target reached
Samantha Lee
22 Oct 14 15:07:52
Two dead in Canada shootings; police search for multiple suspects http://t.co/nYxZLmEyGA via @WSJ $SPY $SPX
Michele Schneider
22 Oct 14 15:07:31
Mish's Daily for 10/23/2014: Why Then A Final Note Prolong, Or Lengthen Out A Closing Song $SPY $IWM $DIA $QQQ http://t.co/25sROSIK5A
22 Oct 14 15:06:54
@mrdollamaker my thoughts on $spy brother :) https://t.co/OpW8tDX3gm
Vlad Mazek
22 Oct 14 15:06:16
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
22 Oct 14 15:05:14
$SPY chart https://t.co/kHzYguOpqV via http://t.co/gH6btxpodo my thoughts on spy for tomorrow hit a follow and favorite
Dat Dude
22 Oct 14 15:05:02
This correction is not over #Bearsh $DJIA $SPY $QQQ
Michael Davey
22 Oct 14 15:03:57
"@Spyder_Crusher: Blog post -- Market Indices Reverse, Oil Still Sticky -- $SPY $IWM $QQQ $USO $CL_F http://t.co/SYwNuRKx59"
Megan Cigelske
22 Oct 14 15:01:40
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
22 Oct 14 15:01:14
@DougKass "Did I mention the market has no memory from day to day? $SPY " http://t.co/hJ3fs3cQ7A #mementomarket
Peter Heupink
22 Oct 14 15:00:41
RT @allstarcharts: if u were waiting for your short entry in S&P500 I think u just got it as it retraced 61.8% of initial down move $SPY ht…
22 Oct 14 15:00:31
RT @philstockworld: Will our "Recovery" Run out of Gas? #Stimulus #Steriods #KansasCity #Fed #Kleptocracy #5%Rule $SPY $DIA $IWM -- http:/…
Seeking Alpha
22 Oct 14 15:00:26
Buy-The-Dip High-Yield Portfolio: Q3 2014 Performance http://t.co/R2YvMnsS2o $AMJ $AMLP $BDCS $CCG $CVY $JNK $REM $SIR $SPY $VNQ $YYY
By  +Follow March 27, 2014 1:31PM



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