The interesting aspect to the enclosed 15 minute chart of the ProShares UltraShort S&P 500 ETF (NYSE: SDS) is that off of the recent double bottom lows at 25.35/36, the SDS rallies have undergone very "disciplined" pullbacks that have preserved the prior near-term breakout levels. Those levels, which are prior resistance and now support, are at 25.70/80 and then 26.30/20.

This is the sign of a move that is developing directional strength and confidence. At this juncture, the series of higher-highs, and higher-lows during the past few days remains the dominant feature of the extreme near-term price action. As long as the profile remains intact, the SDS pattern deserves the benefit of the doubt on the upside. However, a sustained break of 26.15 will put the developing SDS uptrend into doubt.

 

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