Bears Need to Focus on the North Korea Rebound

In light of some selling last week, bulls answered the bell yesterday for the most part with a snapback rally which did not fade into the afternoon portion of the session. 

Beyond that, news hit the wires last night that North Korea was backing off its aggressive saber-rattling of late, which saw the precious metals get slammed overnight and stock index futures get yet another boost. 

However, when we consider the combination of yesterday's relief rally plus seemingly bullish news flow last night, it may also be seen as a textbook setup for bears to swiftly move in and administer an old-fashioned "sell the news" reaction to commence a fresh leg down in an ongoing market correction.

Case in point: Consider the IWM hourly chart, below, ETF for the small caps in the Russell 2000 Index. 

Note how the small caps have essentially been in a downtrend since late-July, as evidenced by lower highs and lower lows by price. That pattern is showing little signs of changing, just yet, as the IWM is actually leading the major indices lower this morning and likely dragged its senior counterparts into he red after a green open. 

If bears can catch equities on the rebound to slam them back down it will a sign of a more standard market correction or pullback, rather than the recent pattern of any slight dip being aggressively bought and gunned back to new highs. 

In the retail arena, COH DKS HD are all getting whacked after earnings, which means bears are running out of excuses to step in for an August correction. 

On the plus side for bulls, a few names like PYPL are remarkably unperturbed and continue to flash strong charts and setups.