Bear market rallies are fast and furious. You never know how high they’ll run, but it’s usually higher than you think. I’ve said it before, and I’ll say it again. Count the candlesticks of the move. Pay zero attention to the points and drama.

This rally ran 5 candlesticks on the first leg, and 7 on the second leg, using the 60-minute chart. If you had no idea what was in the news, would this chart seem  dramatic?  Not really.  Prior resistance is obvious near QLD 75.

Could it run a 3rd leg higher? Sure. That’s why I decided to not get aggressive with the double-short index ETFs. Since I know bear market rallies can end as quick as they begin, and this one just happens to coincide with options expiration week, I wanted to start some short exposure today.

TWM bounced off it’s 200ma on the 60-min chart, and put in a higher high candlestick during early morning. With quite an initial bounce, I passed on that first buy signal. Near the end of day, I averaged in on 2 buys near 77. I didn’t quite wait for the higher high over 77.28, but decided I wanted the overnight exposure. I was planning on buying QID, and/or SDS tomorrow if the market gapped higher one more day. Buying just TWM gave me the right exposure.

As of now, the futures are negative on disappointing news from heavy hitters MSFT, GOOG, and MER.

This will be a real key to the market’s actual strength. If the bulls are able to put in an eventual higher low level of support, we should have a major buy signal, and get back to some trend trading. QLD, SSO, and UWM will be on my radar for the long side.

Forget about any type of financial crisis. Forget about what the price of oil is. Forget what inflation is at or doing. The only thing that matters is what’s portrayed in the charts. For this environment, I’m using the 60-minute chart. The price action on the QLD 60-minute chart has enough volatility, with the least noisy whipsaws , to make it tradeable for me.

Buying higher high candlesticks, allows me to enter into upward momentum, and also after a pullback. I’ve also got a rule, that if the trade isn’t profitable by day’s end, and not stopped out, I sell. I decided to break the rule when I took the QLD stock pick written about. That left me with a gap down. I sold 1/2 at the 5-minute low, and the second 1/2 at the higher of the 5 or 30-minute low. You gotta have a plan.

I then bought the next higher high candlestick, only because of how oversold the market was. Partial sales occur on the way up. I then bought the next higher high candlestick. Most was sold too early, even though I thought 5 bars up were possible.

Don’t pay attention to how far an equity has run in points. Count the candlesticks. Support, resistance, supply, and demand are all you need to know.