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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
Marshall Moore
25 Oct 14 07:40:24
RT @seeitmarket: Did Investment Managers Throw In The Towel This Month? http://t.co/8WtJLvl6pS by @RyanDetrick $SPY $VIX $STUDY
Erik
25 Oct 14 07:40:20
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
DHCXconf
25 Oct 14 07:39:25
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
DHCXconf
25 Oct 14 07:39:00
RT @philstockworld: Friday Freak-Out: #Ebola Spooks the Markets, Iron Ore Collapsing -- http://t.co/l9C4m3vxVZ $SPY $DIA $IWM $QQQ #Futur…
Ryan Detrick, CMT
25 Oct 14 07:38:37
RT @seeitmarket: Did Investment Managers Throw In The Towel This Month? http://t.co/nN396Hjwud by @RyanDetrick $SPY $VIX $STUDY
Hall Abernathy
25 Oct 14 07:38:29
RT @lancejepsen: GST Stock Trader News $SPY $IWM $QQQ http://t.co/tcS9pPPnZN
Genaro Dillard
25 Oct 14 07:38:28
RT @lancejepsen: $SPY VS $IWM Would have liked to see more leadership from IWM throughout the day but what a surge into the close! http://t…
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25 Oct 14 07:38:15
Did Investment Managers Throw In The Towel This Month? http://t.co/nN396Hjwud by @RyanDetrick $SPY $VIX $STUDY
donald Stark
25 Oct 14 07:38:03
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Whistling Pixie
25 Oct 14 07:37:28
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
naomihn2000
25 Oct 14 07:37:04
stop making women where burqa. u use the #quran so u can dominate us women. #ebola is in #SaudiArabia #Iran doing #Islamic work $SPX $SPY
ivan
25 Oct 14 07:36:25
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
NikiM
25 Oct 14 07:35:11
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Jordan
25 Oct 14 07:34:47
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Claire FriedrichsCPM
25 Oct 14 07:34:36
@NoanetTrader $spy on a 1y looks like a possible steep inverse H&S set up to take it over 2050 by the end of yr.
Andy
25 Oct 14 07:33:49
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Daniel Libeskind
25 Oct 14 07:33:36
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
naomihn2000
25 Oct 14 07:33:34
their actions r based on allah this #Quran that. u scums #SaudiArabia #Iran need to stop putting crack in the hookah. $SPY $SPX
armando
25 Oct 14 07:33:31
This is me and @lbhi_services planing the kill on $spy when to enter and leave the trade for profits :) http://t.co/OeSHuY1xCN
Daniel Libeskind
25 Oct 14 07:32:56
RT @philstockworld: Friday Freak-Out: #Ebola Spooks the Markets, Iron Ore Collapsing -- http://t.co/l9C4m3vxVZ $SPY $DIA $IWM $QQQ #Futur…
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25 Oct 14 07:32:35
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
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25 Oct 14 07:32:01
RT @philstockworld: Friday Freak-Out: #Ebola Spooks the Markets, Iron Ore Collapsing -- http://t.co/l9C4m3vxVZ $SPY $DIA $IWM $QQQ #Futur…
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$SPY http://t.co/I6TUdYMxWt
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25 Oct 14 07:30:51
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
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RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
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RT @philstockworld: Friday Freak-Out: #Ebola Spooks the Markets, Iron Ore Collapsing -- http://t.co/l9C4m3vxVZ $SPY $DIA $IWM $QQQ #Futur…
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gokhan
25 Oct 14 07:29:29
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Robert Guilfoyle
25 Oct 14 07:28:40
RT @RyanDetrick: Remember at the start of the week when I said the 42nd week is historically bearish? $SPX up 4.12% is the 3rd best since …
Luisita
25 Oct 14 07:28:35
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
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25 Oct 14 07:28:22
What is the $SPY http://t.co/JL6zHy9Bay going to do next? Get real time alerts and analysis.
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25 Oct 14 07:27:30
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Tim
25 Oct 14 07:27:16
RT @philstockworld: Friday Freak-Out: #Ebola Spooks the Markets, Iron Ore Collapsing -- http://t.co/l9C4m3vxVZ $SPY $DIA $IWM $QQQ #Futur…
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25 Oct 14 07:27:14
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
wa
25 Oct 14 07:27:06
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
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25 Oct 14 07:27:02
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Kevin
25 Oct 14 07:26:37
RT @philstockworld: Friday Freak-Out: #Ebola Spooks the Markets, Iron Ore Collapsing -- http://t.co/l9C4m3vxVZ $SPY $DIA $IWM $QQQ #Futur…
naomihn2000
25 Oct 14 07:26:13
middle east country r run by idiotic beliefs. stop making excuse for ur belief free our women from oppression #SaudiArabia #Iran $SPX $SPY
Maleah
25 Oct 14 07:24:41
http://t.co/WwRfVvXWbM <<-- Register free! I am excited for Tim Sykes special tutorial webinar! $FB $SPY $AAPL #timsykes
armando
25 Oct 14 07:22:20
This is us when we hit trades on $spy we a the trend @lbhi_services @ArmandoSeba1980 http://t.co/R6sZkGoqBH
naomihn2000
25 Oct 14 07:21:18
this is why #ebola needs to spread in middle east country #SaudiArabia #Iran $SPX $SPY http://t.co/8MkpCmoK2u
OptionsPlay
25 Oct 14 07:18:01
DailyPlay Mon Oct 27 $INFY is in a bullish trend with positive momentum. $SPY is bullish on s/t http://t.co/kftZo1sTK2
armando
25 Oct 14 07:17:58
I'm starting trading options Monday with my boy @lbhi_services we going to kill $spy and no one is going to stop us http://t.co/MLpsyWjplY
Proffitt Financial
25 Oct 14 07:17:58
RT @WallStJesus: 💡A Winning Game Plan For Successful #Options Trading ➡➡➡ http://t.co/DAk2qvdtoN $STUDY $SPY
NoanetTrader
25 Oct 14 07:17:33
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Molly
25 Oct 14 07:15:36
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Heather
25 Oct 14 07:14:48
RT @philstockworld: Friday's Fearful Outlook as #Ebola Hits NYC: $SPY $DIA $AMZN $TSLA $TM #Amazon -- http://t.co/UIMDFJvSW2 http://t.co/VN…
Heather
25 Oct 14 07:14:31
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By  +Follow March 27, 2014 1:31PM
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