Looking for a Sign of Strength

After Tuesday's volatile market session that saw stocks sell off late, the major averages did the exact opposite Wednesday, recouping losses of more than 1% and finishing near session highs. The action over the past couple of days is a reminder that volatility is alive and well as the market gropes for a bottom.

Thursday marks the fourth day of a rally attempt for the major averages, which means it's time to start looking for a sign of strength in the form of a big percentage gain in higher volume. A move higher with conviction from current levels would confirm a new uptrend and it would mostly likely force me to close my positions in Proshares Short Russell 2000 (RWM) and Proshares Ultrashort Financials (SKF). I went short the Russell 2000 when the index broke out to the downside from a bearish head-and-shoulders topping pattern last week. SKF, meanwhile, is a new position and if the market tells me my timing was wrong, I won't be afraid to cut losses short....434 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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