Oil stocks bounced again this morning after falling the past two days. I think OIH and DIG can get back to their 50 day moving averages on this bigger (number of days) bounce. It won’t be in a straight line though. Here’s how I’m playing it.

Both DIG and OIH put in higher high candlesticks today. That should trigger buyers. I’m waiting though. I think both will move down to yesterday’s pivot low, possibly go under those pivots, and then move back up. The old shakeout first. I actually have some DUG right now in play for this potential shake that’s working as I write. Oil inventory numbers are tomorrow, which will provide a catalyst for movement.

Flip a coin here. The Nasdaq has moved back to trendline support, which is near that pivot low of 2360. It sure looks as if that Friday rally was a fakeout. The market moved a lot today. It won’t surprise me if the rest of the week is dead.

The SPX is in about the same situation as the Nasdaq. After falling back to trendline support, the index must hold the recent support level below 1261, or it’s picnic time for the bears.

I’m flat after selling QID and SDS today, and looking to buy both back.