Purely from a near term technical perspective, my work argues that earlier this week the UltraShort Financials ProShares (NYSE: SKF) ended "something" on the downside, and now is in the heart of an initial countertrend rally. The "something" that ended either is the end of the most recent portion of the Feb-Apr decline -- from the March 31 recovery high at 19.37 to Wednesday's low at 16.68 -- orthe end of the entire February decline from the February 5 high at 26.98.

If the SKF merely is recovering from the April portion of the decline, then we should be looking for an upside peak in the vicinity of 19.40 to 20.00. If the larger downtrend has ended, then 19.40-20.00 will represent the first resistance target zone -- on the way to a potential upside target of 23.00-24.00.

Let's notice that today's vertical assault broke above the February-April down trendline at 17.30, which likely triggered lots of stops and attracted new buying that propelled the SKF nearly 10% higher. Yes, the huge upmove is reflected in an overbought hourly RSI. However, the RSI broke above its series of lower-highs (downtrend) as well, which confirms (to me) that a near-term trend reversal has occurred.

Furthermore, the hourly overbought condition can be labeled "healthy overbought," and suggests to me the it actually is telling us that the SKF should continue higher in the hours directly ahead. Any pullback weakness should find excellent support and new buying interest in the 17.60/30 area.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.