Still Working Through Competing Timeframes

The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday. 

The leading parts of the market in recent quarters, namely the growth stocks of the Nasdaq Composite Index, biotechnology issues, and the small market capitalization issues housed in the Russell 2000 Index, continue to enjoy snapback rallies after getting pounded earlier this spring.

In recent weeks, these Strategy Sessions have significantly backed off the short-term bearish case on these stocks, instead opting to play them long for quick bounces or alternatively staying flat on them as a whole. These issue include: AMZN FB FEYEGILD GOOG NFLX PCLN SPLK TSLA WDAY YELP, among others. 

Currently, the Russell daily chart is still confirming the “hammer” upside reversal candlestick printed on May 15th. Bulls were finally able to close the Russell back over the 200-day moving average, as well. Headed into this holiday-shortened week, bulls could easily bounce the Russell up further to the declining 50 or 100-day moving average, roughly at 1,140.

However, the overall structure of the Russell chart remains damaged. Seeing this circumstance occur after a multi-year uptrend still compels us to consider the possibility we are working through a lengthy topping process. But even if we are not, a correction in the Russell has clearly been in play since the spring and has not yet healed.

Despite the small caps being in bounce-back mode, punishing latecomer and undisciplined shorts, the fact remains that…

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