A Mass-Produced Algo Chart

The small caps remain at the core of the bull versus bear debate as we delve further into the winter months of 2017. 

Specifically, the recent relative weakness in the Russell 2000 Index has galvanized bears insofar as expecting an imminent market pullback. That may very well materialize, but we need to see the small cap actually break down first, then eventually take the rest of the market with them. 

On the IWM (ETF for the Russell) zoomed-out hourly chart dating back a month, we can see multiple probes of the lower end of a well-defined range. However, the range has not decisively broken lower yet and now the small caps are snapping back to the middle end of the range today. 

If bears are to keep their thesis alive and well, I suspect small caps need to fail at the midpoint of this defined range sooner rather than later, and then break the low end of the range on the next attempt lower. 

The cynical view of this chart is simply one of "algo ping-pong" with buy and sell programs chewing up traders with each seemingly random swing.

Ultimately, though, this is thus far a shallow consolidation after a prior uptrend, which means the onus is still on bears to prove their case. 

More on specific trade ideas in my usual Midday Video for Members.