Last hour bounce

Today market had a big gap down in the early morning and headed lower to 1075, then have a nice bounce to 1102 area, which becomes the resistance. The resitance hold as a wall and SPX started a straight down trend to 1080. Within this period, I thought I was missing a good short. Then after 3pm, we saw a big swing up from 1080 up to 1123 in just one hour. It looked like everyone wanted to buy afraid of missing the bounce. Actually when spx break through 1102, it was a good long entry. Anyway I missed the rally.

Market did have a bounce but not in the way I wish. I entered long position one day earlier. If I did not long yesterday, I would definitely long the gap down today. Since I did not want to take the risk of averaging down, I did not add my losing position at the open. In the morning, even SPX and COMP down 2 percent, but small cap holding very well (down only 0.5 percent). That is a good sign that small cap is hitting a temporary bottom (600) and will lead the bounce. I closed my UPRO position at 12pm when SPX hitting 1100 resistance for a tiny loss. I thought I did well from 12pm to 3pm when seeing the market tanking. But obviously I did not benefit from the last hour rally.

Question for today: In this kind of the oversold extreme condidtion, is it better to long index ETF or long beaten down stocks? Look at AKAM, ENTR, ZAGG, TZOO, FMCN, etc. They started bouncing in the early morning even when the index going down. And they did not push back much during afternoon. I observed that similar situation existed when market tanking, these stocks also leaded. I guess long or short these kind of stocks have better rewards than long or short ETF. But the strategy is to pick up the right stocks.

What about tomorrow? No idea for me. Look at Aug 9th and Aug 10th, a big hammer day followed a big red drop day. I think it could happen tomorrow. I wish a small up tomorrow to confirm the new up trend by forming bullish engulfing. Or down hard to give me some long entry. But I will watch closely $RUT to back test the broken trendline around 670 area. If small cap can lead the market up, it can also lead market down hard. I think the best way to play the market now is staying in cash.