Let's notice that after the Proshares Ultrashort SPY (SDS) pulled back (to 82.88) during the first hour of trading. It climbed strongly to an intraday high at 87.11, which happens to be just shy of yest.'s rally peak at 87.65. The fact that the price structure failed to make a new high, and instead has backed away from the highs, suggests strongly that the upleg from the January 6 low at 64.29 is at or is quickly nearing completion ahead of a meaningful decline.

Two scenarios are most likely. (1) All of the action from yesterday's high at 87.65 is part of an incomplete bullish coil, which when complete should trigger one more upleg that projects to 88.00/30. Or, (2) failure to remain within the coil, followed by a break beneath 82.90/85, should trigger downside acceleration towards next target of 78.00.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.