Short the rally in the morning?

That is the question I'm asking myself today. I'm not exactly sure why, but last Wednesday's rally just felt like shorting the next morning was the correct call and I made it without hesitation. There were all the telltale signs, with the volume low and according to some oscillators, the market was oversold.

What about today's rally? Again, the volume was weak (IBD) but it looks like we aren't oversold anymore, at least in the daily Dow and S&P charts. Maybe another reason why I'm thinking this rally won't immediately fail is because all the short candidates I'm following look as if they will attempt to retest their 50 dma. Therefore, I'm not going initiate any shorts tomorrow morning. Actually, looking at the Nasdaq, I'm thinking about buying some qqqq calls for a quick trade. Here are my reasons.

• The slow stochastic is oversold
  
• Money flow index is oversold
  
• Sandisk exploded after-hours and I think that might bring in some buyers/chasers. Also, SIRF reports after the close tomorrow and it might be worth betting on a similar reaction. That chart is just as ugly as Sandisk's was.

I don't know...I'll wake up early tomorrow and decide.

Update July 25, 2006

I just wasn't feel'n it. No buys today. SIRF is up >4% though.

After hours update: SIRF is tanking! Too bad I didn't make that trade today. It would have felt good to get a 3.2% gain in a day just to watch it dive after the close.