Today's technical outlook: Market may rally big

The major indices continue to test their November lows, with the Dow making an intraday penetration that -- had it stuck -- would no doubt have led to an immediate test of the bear market lows.

But, again, the markets held above the fragile support line at Dow 8,000 and the S&P 500's support zone at 800-820.

How long this support will hold is anybody's guess, but Friday's reversal from a crushing opening was impressive despite its lack of convincing volume.

With all of our internal indicators grossly oversold and sentiment clearly bearish, the market should rally from its current support.

For that reason, traders should grab their favorite long 2x exchange-traded fund (ETF) and, despite the risk, go for a trade that could result in a profit from a 400- to 500-point advance in the Dow.

2x ETFs target two-times the daily return of the underlying index. My favorite trade for today is the Ultra QQQ ProShares (NYSE: QLD).

However, the market does not always accommodate our most ardent wish, so despite the likelihood of a rally, traders must set stop-loss orders under last week's lows or take on an enormous risk of loss.

A daily close under the intraday lows of last week would most certainly lead to a test of the November low and could even lead to a general market rout.

So, be careful out there and only risk what you can afford to lose.

Sam Collins is a contributor to OptionsZone.com.