Period of Recovery for the UltraShort SPY (SDS)

The one salient feature of the enclosed hourly chart of the ProShares UltraShort SPY (NYSE: SDS) is the series of lower highs and lower lows, which represents a powerful downtrend. However, after this morning’s new low at 51.47 and upside reversal to a high of 54.17, I have to consider that “something” ended on the downside and that a period of recovery rally already has started.  If that proves to be the case, then the SDS will NOT break this morning’s low prior to trading higher – above 54.17 to at least 55.37 – and likely on the way to the 57.00 area “to probe serious resistance.”  Of course, right now the SDS is consolidating around the mid-point of today’s range – setting up a very important directional move later this afternoon.