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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
The LincolnList
22 Nov 14 18:30:03
5 wealthy people who were broke most of their lives http://t.co/uuBK1DHMaS $SPY $MBLY
22 Nov 14 18:19:03
RT @SirTitan45: It pains me 2 have 2 begin this initiative but i will have to repeat 2013 & buy some $spy and $qqq calls. I will still be b…
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22 Nov 14 18:18:49
It pains me 2 have 2 begin this initiative but i will have to repeat 2013 & buy some $spy and $qqq calls. I will still be buying gold miners
Sherard Leary
22 Nov 14 18:15:53
RT @lancejepsen: GST Stock Trader News $SPY $IWM $QQQ http://t.co/EFMzTe44Q1
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RT @MarketsRecap: Everyone Wants Dollars (Again) by Marc Chandler $UUP $UDN $FXE $FXB $FXY $SPY http://t.co/FZYRQj0DYp
Taylor Thoen
22 Nov 14 18:02:15
RT @StockTwits: A history of Quantitative Easing and the stock market. All seen on one chart http://t.co/whPtyQQs2k $SPY $SPX http://t.co/m…
Poor Will
22 Nov 14 17:52:20
RT @gtlackey: Happy Thanksgiving! No password needed for this week's report: November 23, 2014 Strength In Numbers http://t.co/TC8GTg5zRd …
Kevin Brent Cook
22 Nov 14 17:48:38
$VIX To conclude, read my stream today to grasp why I say "TA on VIX is dumb." Observing&ExploitingExtremes = $$. But TLs&MAs =DunceCap $SPY
Jarrod Snyder
22 Nov 14 17:48:21
RT @lancejepsen: Impeach Obama He's Driving the Country Bankrupt $SPY $QQQ $IWM http://t.co/SdmWvSOUXx http://t.co/kdtASlbSSQ
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22 Nov 14 17:34:20
alex demache
22 Nov 14 17:26:07
RT @MaxGanik: MACD about to go negative in $SPY $SPX and $QQQ. This could lead to a small correction before a santa claus rally.
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22 Nov 14 17:25:16
RT @seeitmarket: S&P 500 Technical Update: Oops, Central Banks Did It Again [w/ Fibs & Levels] http://t.co/CSTE9YOn17 by @andrewnyquist | …
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There are a lot of #Grubers hawking the markets, some well known amongst us. $SPY $TLT #SUCKER
alex demache
22 Nov 14 17:22:36
RT @harmongreg: $SPY Trends and Influencers November 22, 2014 - Dragonfly Capital http://t.co/zeDejU1iql $IWM $QQQ $VXX $TLT $EEM $GLD $USO…
22 Nov 14 17:20:55
$SPY OI for maturity 11/22/2014. 150.00 Highest put. 210.00 Highest call. http://t.co/hxSHHhYUF1
Abel Daltrey
22 Nov 14 17:15:41
aJefqWkhPn Midweek Stock Mkt Analysis 10/22/14 $SPY $QQQ $IWM $XLF $SMH $AAPL
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22 Nov 14 17:13:24
$SPY $DJA U.S. Stocks are 2nd Most Overbought In History http://t.co/WoVe6KICBS via @YahooFinance
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My Blog/Stocks/Promos http://t.co/8hFk27Db1x via @wordpressdotcom $SPY $FB $TWTR $DJIA
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$SPY Max Pain is 200.00 for maturity 11/22/2014. Price = 206.68. http://t.co/crrnEdebk9
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22 Nov 14 16:56:16
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$SPY Best 3 ETFs from 10/15 low: $USD +39%, $RXL +28%, $QLD +28% , as Semi's Drugs and NASD up big. http://t.co/GmYkVFUNlD
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RT @KevinBCook: $SPY 2 of 2: have just proven that you never understood how $VIX calculated & your quant skills are illusory & in need of s…
22 Nov 14 16:41:47
Read this $SPX $SPY journal and you will have good idea of what to expect in the week ahead. http://t.co/F577gOHuZD
22 Nov 14 16:39:50
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22 Nov 14 16:33:18
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The LincolnList
22 Nov 14 16:30:08
Part time swings but full time gains. +75% YTD gains and only 6 losers since March http://t.co/dtGEzJ35fV $SPY $CANF
Caelyn Grzelczyk
22 Nov 14 16:19:02
Good Morning Traders!! Letas rock n roll today. $SPY $VXX #HFT
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A history of Quantitative Easing and the stock market. All seen on one chart http://t.co/AaGahclexH $SPY $SPX http://t.co/XNQFlynjcf
Trade Group™
22 Nov 14 16:18:03
A history of Quantitative Easing and the stock market. All seen on one chart http://t.co/6GGgMM37r3 $SPY $SPX http://t.co/bUD7Vd58lb
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Full portfolio details, updated weekly at http://t.co/afbzGpOYuN $SPY $AAPL $GRPN
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PennyStock Zone
22 Nov 14 16:01:00
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22 Nov 14 15:53:52
$SPY 2 of 2: have just proven that you never understood how $VIX calculated & your quant skills are illusory & in need of statistical rigor
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22 Nov 14 15:52:58
RT @StockTwits: A history of Quantitative Easing and the stock market. All seen on one chart http://t.co/whPtyQQs2k $SPY $SPX http://t.co/m…
Kevin Chu
22 Nov 14 15:52:38
RT @StockTwits: A history of Quantitative Easing and the stock market. All seen on one chart http://t.co/whPtyQQs2k $SPY $SPX http://t.co/m…
Kevin Brent Cook
22 Nov 14 15:44:52
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22 Nov 14 15:44:07
http://t.co/6I8VNnRkyA <--- Amazing subscriber to Super_Trades - check out his profit chart!!! $CREE $AWRE $SPY $HLX $RGLS
22 Nov 14 15:42:16
RT @zentrader: S&P 500 Stretched Like A Spring $QQQ $SPY http://t.co/FcY5T0Rxna
GSK Wealth Builders
22 Nov 14 15:38:51
RT @YahooFinance: Tony Robbins: Ray Dalio’s “All Weather” Portfolio http://t.co/89WSIMWmvP via @tonyrobbins $SPY $TLT $AGG $GLD http://t.co…
jeff pierce
22 Nov 14 15:35:37
S&P 500 Stretched Like A Spring $QQQ $SPY http://t.co/FcY5T0Rxna
22 Nov 14 15:35:37
S&P 500 Stretched Like A Spring $QQQ $SPY http://t.co/26ViMMusvi
22 Nov 14 15:20:10
ClayTrader: * * $SPY Video Chart 11-21-14 * * http://t.co/KzqUUrK8B3
Business Ventures
22 Nov 14 15:18:04
Top story: @RampCapitalLLC: 'ICYMI: Updated $SPY entry points $STUDY …' http://t.co/lwZjz1Y3as, see more http://t.co/tg2jBvNZhg
$PKGM$ alerted 2day
22 Nov 14 15:13:28
ClayTrader: * * $SPY Video Chart 11-21-14 * * http://t.co/nqqCyTOmmT
Gabriel Haukness
22 Nov 14 15:12:13
$SPY breaks resistance marking 5 rallying weeks. Daily and hourly RSI both above 70. Hit most take profit levels, cash is ok for me here.
By  +Follow March 27, 2014 1:31PM



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