This post was written by Minyanville contributor James Kostohryz
I believe that the market is currently poised in a binary position.

Better than expected earnings and/or guidance by the major banks and/or other major companies this week could send the S&P 500 flying past its 200 day moving average triggering a wave of long purchases and short covering (note that short interest has been rising sharply in the past few days).

On the other hand, disappointment from any of the major financials such as Goldman Sachs(NYSE:GS), JP Morgan (NYSE:JPM) or Citigroup(NYSE:C) and/or major companies reporting this week such as Intel (NASDAQ:INTC)or Google(NASDAQ:GOOG)could send the market reeling into a quick 10% correction.

Here is my baseline view of the week, subject to change at any moment.

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.

Minyanville contributor Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

• I've taken a leg in the Ultra QQQ ProShares (AMEX: QLD). The market has popped 2% off lows, the question is will it pop the full 7%?
  
  
• I'm seeing a few positive divergences and the percentage of stocks below the 50 day moving average is well below the 2002 levels. I haven't looked at the percentage of stocks below the 200 day, but I'm sure the reading should be equally distressed.
  
  
• I know people are pricing in earnings per share Armageddon in tech land -- so the question is, what happens to many of these stocks if it's really just sort of "punk" and not a total cataclysmic drop in revenue guidance.