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

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Results for SPY
4 Sep 15 20:45:16
$SPY OI for maturity 09/11/2015. 180.00 Highest put. 211.00 Highest call. http://t.co/E4pjYbOAGc
4 Sep 15 20:43:43
RT @seeitmarket: Are The Financial Markets Turning Into Mr. Toad's Wild Ride? http://t.co/e9gqUgdT0D by @BartsCharts $SPY $USD $TWTR http:/…
robert houston
4 Sep 15 20:42:13
RT @KevinBCook: $SPY Market is solidly below new highs push of Jul-Sep '14. Does 1-yr of Sectors look like Bull is alive & well? $SPX http:…
4 Sep 15 20:41:07
http://t.co/gFp5NZs97c <-- *REVIEW* TIMFundamentals Part Deux $SPY $ALNY $DAN $COP $CSIQ $BOX $XIV #stocks
TalkMarkets Recap
4 Sep 15 20:39:03
Is The Reign Of Equal Weight #ETFs Over? $EWRM $EWRS $IWM $IWR $RSP $SPY http://t.co/9Z4WzyULOq
4 Sep 15 20:39:02
The #Stock Whisper Of The Day: $BP $SPY $USO $GPRO http://t.co/WDiT71W8mo
Don Gulfo
4 Sep 15 20:32:16
RT @RiskReversal: ICYMI: Name That Trade – $SPY: A Certain Ratio http://t.co/40VdjbWCxV @cclagator
4 Sep 15 20:30:31
$SPY Max Pain is 200.00 for maturity 09/11/2015. Price = 192.59. http://t.co/pUtDoYO31h
Roy Torphy
4 Sep 15 20:24:24
RT @SeekingAlpha: Growth In U.S. Services Sector Remains Solid In August http://t.co/9WIGjswjXa $SPY $QQQ $DIA
James T
4 Sep 15 20:05:03
RT @howardlindzon: Nasty "@jackdamn: Only 10% of the S&P 500 are trading above their 50-day simple moving average $SPY http://t.co/3O9ynU…
Warrior Trading News
4 Sep 15 20:04:48
$FB $TWTR $LNKD $AAPL $SPY $QQQ https://t.co/WekpJnJuIL
4 Sep 15 19:56:33
RT @JackDamn: The percent of S&P 500 stocks trading above their 200-day simple moving average ended the week at 24.20%. $SPX $SPY http://t.…
4 Sep 15 19:56:24
RT @JackDamn: Updated: $TLT vs $SPY year-to-date performance (%). http://t.co/7rueut2hAe
The Delta Theta
4 Sep 15 19:49:03
‘Bearish divergence’ is warning investors not to buy the dip in the stock market http://t.co/pqnNpCDnHM via @MarketWatch $SPY
Nereida Diesen
4 Sep 15 19:43:23
"howardlindzon The stock market has been struggling. Don't blame the economy. New from The Fat Pitch http://t.co/9nVNJHqD7P $spy"
Maralyn Burstein
4 Sep 15 19:43:13
RT @LMTentarelli: Still Short $SPY < 40 week, 10/40 week down, 2015 Weekly closing low. http://t.co/R5jxPXQKh8
Aaron Charles
4 Sep 15 19:40:26
rarities in a rarefied world: day traders who trade one stock and one stock only. $SPY
Damon Sharkey
4 Sep 15 19:39:05
RT @LMTentarelli: Still Short $SPY < 40 week, 10/40 week down, 2015 Weekly closing low. http://t.co/R5jxPXQKh8
4 Sep 15 19:34:40
RT @KimbleCharting: Danger Will Robinson if support breaks at (2) $SPX $SPY http://t.co/3IlJdtYJI9
susanta biswal
4 Sep 15 19:32:33
RT @StockTwits: In volatile markets, visuals like this can be incredibly helpful. Shared by @alphatrends http://t.co/NcQFjMwPcX $SPY http:…
Cody Freeman
4 Sep 15 19:32:26
RT @alphatrends: VIDEO http://t.co/TywTiWzLxF Stock Mkt Analysis 9/4/15 $SPY #VWAP $QQQ $IWM $SMH $TLT $AAPL http://t.co/yYXySdFDSI
Damon Sharkey
4 Sep 15 19:32:11
RT @rightviewrob: Twin Eveningstar Patterns on the S&P Chart $SPX $SPY http://t.co/veOZXXHLH1 http://t.co/gXnMOHeexa
Trade With SK
4 Sep 15 19:31:32
Thermos another one $FB vs $SPY .. $study good knowledge for ur market index can give u great $ in the market http://t.co/hGzlmYqqmN
4 Sep 15 19:30:55
RT @andrewnyquist: Market Corrections Chart (updated) - Tells us this is more like 2011 than more recent "typical" pullbacks. $SPY $VIX htt…
Craig S.
4 Sep 15 19:30:55
RT @UPBOptionMil: Nearly 9 months of pleasant consolidation gave birth to one nasty little bear $SPY http://t.co/ohq7KK7C9C
Sarah Glass
4 Sep 15 19:29:54
RT @MarketTimer_F3: Well, September looks like it will be off to a good start. $SPY http://t.co/U38Oizf7Pz
4 Sep 15 19:27:52
Unrelenting Buy Support Continues & More Artificial Rally Likely Next Week. #stocks #futures $ES #emini $SPY http://t.co/B7HdQ4bdPO
See It Market
4 Sep 15 19:22:20
Are The Financial Markets Turning Into Mr. Toad's Wild Ride? http://t.co/e9gqUgdT0D by @BartsCharts $SPY $USD $TWTR http://t.co/HTHELw3WH6
The Double Dip
4 Sep 15 19:22:20
RT @KevinBCook: $SPY What is the short-term bullish technical case now? Hard to see when $SPX below 1-yr ago levels (3Q14 mean price 1962, …
Mani Ohli
4 Sep 15 19:22:11
Option Millionaires: nlightn: yep,..got those $SPY puts also. Oct165p @ .18 http://t.co/avbEEeRibl
Perfor Mance
4 Sep 15 19:22:06
Option Millionaires: nlightn: yep,..got those $SPY puts also. Oct165p @ .18 http://t.co/sc12ZnEJp3
Damon Sharkey
4 Sep 15 19:21:19
RT @JackDamn: Updated: S&P 500 daily. Still below 1980. Watch: 1900, 1867 (dn). 1980 (up). Best guess: we are doomed. $SPX $SPY http://t.co…
Trade With SK
4 Sep 15 19:21:03
Thermos example for u :) $spy $study . How having good knowledge about $spy can change our day trading . Good luck http://t.co/tqwjFAnZvo
4 Sep 15 19:21:01
Still Short $SPY < 40 week, 10/40 week down, 2015 Weekly closing low. http://t.co/R5jxPXQKh8
4 Sep 15 19:17:31
Great hour long interview w Jim Chanos about the "massive troubles facing China" $SPY $QQQ $IWM http://t.co/qfPRPMhzYR
Jersey Drew
4 Sep 15 19:14:36
RT @UPBOptionMil: Nearly 9 months of pleasant consolidation gave birth to one nasty little bear $SPY http://t.co/ohq7KK7C9C
Tom Loffman
4 Sep 15 19:12:40
Additional $SPY commentary: despite down market today close was above close 9/1 and 8/25 with decreasing volume - reduced selling pressure.
Todd Sullivan
4 Sep 15 19:11:30
"@howardlindzon The stock market has been struggling. Don't blame the economy. New from The Fat Pitch http://t.co/L1vQWUBXkG $spy"
Tom Loffman
4 Sep 15 19:11:04
Indicator commentary $SPY: net indicators slanting neutral to bullish, but MACD system still out. Only 1/6 of my best $SPY systems long.
Tom Loffman
4 Sep 15 19:10:07
Indicator summary $SPY: Positive: range & volume trend, VIX leve. Negative: MACD system. Neutal: price mo, VIX trend. Net = neutral to bull.
Cody Freeman
4 Sep 15 19:08:58
RT @JackDamn: Updated: $TLT vs $SPY year-to-date performance (%). http://t.co/7rueut2hAe
DW Pendergast
4 Sep 15 19:08:34
$SPY Three key intraday cycles bottom on the .SPX suggest bullish potential next Tuesday http://t.co/jQ4Zs9F49h http://t.co/CFgVBCHMb8
4 Sep 15 18:59:32
Explaining What's Going on In The Markets + Specific $SPY Ranges http://t.co/3OucQsHPSL
4 Sep 15 18:56:37
Nearly 9 months of pleasant consolidation gave birth to one nasty little bear $SPY http://t.co/ohq7KK7C9C
Aaron Charles
4 Sep 15 18:56:35
$SPY options #calls #puts made 35 cents today! great week 14:15
4 Sep 15 18:53:15
RT @SwatOptions: $SPY gave you the levels... in progress https://t.co/i9djUXv09K
4 Sep 15 18:52:08
If $spy goes down to about $190.3 to $190.5 on Tuesday, I will buy Call and watch it goes up to about $194 something for an exit.
Navi Avatar
4 Sep 15 18:50:14
China Central Bank Governor Zhou says bubble "burst" at G20 meeting today...yeah keep buying bulls... $FXI $SPY $QQQ http://t.co/SgLoNKri7Y
4 Sep 15 18:49:03
RT @seeitmarket: New Post: "Gold Prices Flat After Jobs Report; Fed Up Next" http://t.co/2vIXUXEpq7 by @andrewnyquist $SPY $GLD #gold http:…
A Formal Cat
4 Sep 15 18:41:42
RT @howardlindzon: Nasty "@jackdamn: Only 10% of the S&P 500 are trading above their 50-day simple moving average $SPY http://t.co/3O9ynU…
By  +Follow March 27, 2014 1:31PM



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