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Stock Market Blues is a song about how NOT to get the stock market blues, with an Amusing, Educational lyric full of age-old Wall Street axioms, cliches, great advice.

Unusual rhymes will make you smile and recognize the rhythm of Wall Street. A Smooth Jazz Melody written & performed by Kevin Disimone of Bloodline, accomplished musician and songwriter. Lyrics by Robert, Trading Strategist at AlphaKing.com which Made 70% Return in 2008 and updates, publishes performance daily for all to see!

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Reversal Rally May Come Soon!

Trader Talk

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with no high volume follow-through advances to confirm any of the big up days since the crash landed in September and October. The leadership profile also remains very bearish, with 46 stocks making new 52 week highs versus 2,576 stocks making new 52 week lows.

The 4% rule remains negative, while Federal Reserve policy remains positive. The VXO volatility indicator closed the week at 76.2, starting a new spike up in fear, though still shy of the spectacular number that suggests this bear plunge is over. The primary Elliott wave count suggests a wave 5 meltdown remains underway, with today's pop a minor wave iv of an expected 5 wave move that should see recent news lows breached on a closing basis. What should follow this wave 5 plunge (to end the giant wave 3 that started in May,) is a mega rally to start a giant wave 4. In other words: still lots of bear to go, though getting ready for a big bounce much larger than we've experienced so far this year.

Traditional seasonal trends have us looking for a rebound following a capitulation collapse in the 4th quarter, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

This week saw the capitulation melt-down we wrote about last week commence for real, and today's snap-back appears simply a partial counter-trend rally within than larger melt-down run. While this melt-down run can see much lower prices for the stock indexes, this is the time to be thinking about where to buy, rather than following the dumb money in believing the financial world is about to end. Indeed, our biggest fear should be missing the entry boat on this very well telegraphed plunge - and thus the stock market take off without us on the expected mega rally headed our way fast - rather than trying to milk every last dime of profit on short positions.

This market has opportunity written all over it. Want to make 20, 30, 50% on your 401K? Then this is the kind of technical set up where that can be delivered, and in very short order (as the shorts get creamed on the recovery bounce soon to come.) So get your mind together over the weekend as to what you want to do on the long side. Staying in cash while the AK Trading indicator remains in sell mode is not the dumbest thing one can do - those bulls who stayed long this year while the AK indicator was in sell mode have that covered - though we plan to move the AK portfolios to the long side on any move to new lows next week.

We have studied bear markets, and there is nothing about this one that says it will break from its traditional breakdown followed by recovery pattern. Wave 1 and 2 were the topping action earlier in the year. Wave 3 was the meltdown that landed in September/October/November (which is still playing out), and thus what should follow the sharp spike down below the October 10 lows is a wave 4 sideways churn trading range pattern with Dow 7000ish as the bottom, and Dow 10,000ish has the top. Do the maths. That's a near 50% rally for the Dow (and you can bet we'll be buying something with a little more Ommph! than the Dow.) Since wave 4s are M shaped rally, pullback, rally, pullback moves - within a very wide trading range over the prolonged periods of time - these near 50% moves should land multiple times before wave 4 is complete. Yes, this will likely end very badly for the bulls - as this great bear is for real - though wave 4s of this magnitude offer tremendous amounts of profits for those looking ahead with a wary eye on what comes next. We expect to act very early next week, possibly as early as Monday. The more red ink we see the more comfortable we are in buying long.

Have a nice weekend.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

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"Stock Market Blues"

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Listen to & Buy the New Stock Market Blues Song!

Listen to & Buy Stock Market Blues Here

Stock Market Blues is a song about how NOT to get the stock market blues, with an Amusing, Educational lyric full of age-old Wall Street axioms, cliches, great advice.

Unusual rhymes will make you smile and recognize the rhythm of Wall Street. A Smooth Jazz Melody written & performed by Kevin Disimone of Bloodline, accomplished musician and songwriter. Lyrics by Robert Bendekgey, Trading Strategist at AlphaKing.com which is UP 95% year to date thru 11-19-08 and updates, publishes performance daily for all to see!

No, Stocks Haven't Hit Bottom Yet!

Talk is Cheap. See our Actions updated daily: http://alphaking.com/performance/

Trader Talk
The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with no high volume follow-through advances to confirm any of the big up days since the crash landed last month. The leadership profile also remains very bearish, with 10 stocks making new 52 week highs versus 503 stocks making new 52 week lows.

The 4% rule remains negative, while Federal Reserve policy remains positive. The VXO volatility indicator closed the week at 70.3, starting a new spike up in fear. The primary Elliott wave count suggests a wave 5 meltdown remains underway, with yesterday's pop a minor wave ii of an expected 5 wave move below the October 10 crashing lows.

Traditional seasonal trends have us looking for a rebound following a capitulation collapse in the 4th quarter, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

Look, there is going to be one helluva rally coming out of all this churn, but our technical works says we have to suffer one last clean-out crash before this monster rally lands. We have experienced many one-day-wonder false starts to this expected advance since this bear started, and the failure of these rally pops is testament to the internal technical weakness that suggests very strongly that the October 10 lows are not the technical lines in the sand from which a more lasting bull surge will emerge. Indeed, the on-going five wave mega plunges, followed by big - though lesser - three wave partial recoveries, suggest the bulls are fast running out of time before the next killer clean-out plunge lands. Focusing in on the move above the 20 day moving averages (gold line) in the charts below that landed a week of so ago, we can see the peak as a head of a head and shoulders top, with the recent move back (yesterday and today) to retest the 20 day MAs as part, or whole, of the right shoulder. That puts yesterday's low, and the October 10 lows, as the neckline where raw capitulation resides. We've seen this movie before, and it doesn't end well for the bulls who see yesterday's bounce as the end of their misery. What really happened yesterday was the stock market landed on the mortician's table only to croak a barely audible: "I'm not dead yet." Now the mortician is a tad deaf, and the starting the bone saw doesn't help, so our advice is you better be ready for some terror and horror to come as we get to see exactly what the bulls are made of...

Have a nice weekend.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Stocks: Bottom NOT in Yet!

Trader Talk
The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with no high volume follow-through advances to confirm any of the big up days since the crash landed earlier this month. The leadership profile also remains bearish, with 18 stocks making new 52 week highs versus 205 stocks making new 52 week lows.

The 4% rule has turned positive, confirmed with bullish Federal Reserve policy. The VXO volatility indicator closed the week at 62, showing some modest pullback in fear. The primary Elliott wave count suggests a wave 5 of 3 meltdown run is slated to land anytime soon as wave 4 counter-trend advance stalls and reverses into what should see one more crash to major new lows for the stock indexes.

Traditional seasonal trends have us looking for a rebound following a capitulation collapse in the 4th quarter, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

The up/down violent trading action was in play once again this week, with this one ending nearer the top of the recent trading range. The technical set-up calls for the bulls to be handed yet another beating that their complacent: "The bottom is in!" mantra deserves. Bear markets are all about crashing moves followed by straight up advances as the bulls get tricked into believing the bull is back. While we don't claim perfection, we did lock in some profits on the big dip earlier in the week, while adding new short positions as the sucker rebound unfolded. We would have liked to lighten up more on the dip, but one thing about the current volatility is the big moves offering very little chance to get in or out of positions. Since the close on Friday was the fourth consecutive up day, we are very confident that next week should see a reversal of this week's gains. Yes, it's election week. Yes the European central bankers will cut interest rates. Yes, it's the start of a new month. Despite all that manipulative potential, our technical work says the best the bulls can hope for next week is some sideways churn, though our confidence level is super-high that the week will end in a victory for the bears no matter what happens earlier in the week. Not even the famous rebound off the 1987 crashing lows - a favorite of the buy-and-hold crowd - went higher from this position without falling in one last gasp five wave plunge. And that was only a correction within a secular bull market. This is something much more dire, and real. When our indicators say to buy we will buy with both fists and then some. But first we get to see how the financial markets handle the next capitulation plunge...

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Stock Market in Crash Mode

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with zero high volume accumulation days to counter a slew of high volume distribution days. The leadership profile also remains very bearish, with 21 stocks making new 52 week highs versus 2,008 stocks making new 52 week lows.

The 4% rule remains bearish, while Federal Reserve policy remains bullish. The VXO volatility indicator closed the week at 79, continuing the bull market for fear. Please note the high for this sentiment gauge is a whopping 172 during the 1987 crash, so while we remain at super-high levels, the fear spike may have a lot more to run. The primary Elliott wave count suggests a wave 5 of 3 meltdown run is in play, and should result in yet another crashing plunge in very short order.

Traditional seasonal trends have us looking for a rebound following a capitulation collapse in the 4th quarter, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

Oh, my, what another WOW! week. The news remains grim, and can be expected to remain grim. The internal count calls for more downside action, and more severe pain for the bulls. While they may be able to drag the next plunge out with more sideways action going forward, the odds of probability remain super high the bears will have their day in a big way in the non-too-distant future. Markets around the world broke through critical support on Friday, and the US indexes are hanging by a torn finger nail to their must-hold-at-all-cost technical lines in the sand levels. The remainder of the year should see the bulls enjoy a respite rebound at some point - once the capitulation plunge takes another pound of financial flesh - but those looking for an end-of-year rally to help save the day should think again, for the overall technical set-up suggests a great deal more bear misery should land before we hit any lasting bottom. When our indicators say to buy we will buy with both fists and then some. But first we get to see how the financial markets handle the next capitulation plunge.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Bear Market Still Growling!

Trader Talk
The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with a lack of any high volume follow-through days to confirm of any recent rally attempts. The leadership profile also remains bearish, with 49 stocks making new 52 week highs versus 344 stocks making new 52 week lows.

The 4% rule remains bearish, while Federal Reserve policy remains bullish. The VXO volatility indicator closed the week at 71, continuing the bull market for fear. Please note the high for this sentiment gauge is a whopping 172 during the 1987 crash, so while we remain at super-high levels, the fear spike may have a lot more to run. The primary Elliott wave count suggests the wave 3 of 3 meltdown run is nearing the end of the crash phase. We believe we are currently in a wave 4 trading range with a fifth wave capitulation collapse still to come.

Traditional seasonal trends have us looking for a rebound following a capitulation collapse in the 4th quarter, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

There are no words to describe the trading action this week beyond WOW! Monday saw the S&P500 up 12%, and then Wednesday saw the worst one-day plunge since the 1987 crash with a 9% pummeling, to be followed by Thursday's 4% rally going into options expiration Friday. What a week. We shorted at the open Tuesday, and then again at the open today. That tell you what we think is slated to land next? Volume dried up the closer to Friday we got. The economic news was grim. Next week is all about earnings, with some really important stocks and sectors reporting each and every day next week. This sets up even more volatility than we experienced this week. Almost everyone accepts we are currently in a recession - about a year after we started on the recession drum - and the question now has moved into how bad is it going to be. Very bad, is our first impression, and one has to look no further than stock market action this year to see what that important economic forecasting indicator thinks about our economic plight going forward.

We have our plan for what comes next, and we should have a giant head's up as to when the expected plunge is nearing its end. We expect things to get worse before they get better. When our indicators say to buy we will buy with both fists and then some. But first we get to see how the financial markets handle the capitulation plunge end game.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Bear Market History Made!

Weekly Trend & Trade Review

Trader Talk

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, confirmed with a very bearish leadership profile, with 22 stocks making new 52 week highs versus 4,340 stocks making new 52 week lows.

The 4% rule remains bearish, while Federal Reserve policy remains bullish. The VXO volatility indicator closed the week at 86, continuing the bull market for fear. Please note the high for this sentiment gauge is a whopping 172 during the 1987 crash, so while 86 is super-high, it may have a lot more to go. The primary Elliott wave count suggests the wave 3 of 3 meltdown run is nearing the end of the crash phase.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

WOW! does not begin to describe the trading action this week. Triple WOW! Quadruple WOW! Maybe even 700 billion WOWs! For those who may have missed it, the stock indexes fell over 20% THIS WEEK. That fits my definition of a crash, any day of the week. And the thing is, it all seems so orderly that we fear we've seen nothing yet. Percentage-wise, the losses are on par with both the 1987 and 1929 crashes, thus we weren't kidding when we said this was a meltdown of historical proportions. And while those comparisons suggest a recovery bounce should land at this juncture, the internal wave count and general calm feel suggest there's one more scary plunge to come. One that sees the VIX fear index best levels seen in 1987. Are we talking DOW 7,000? Or 6000? Or 5000? Or worse? Yes. Maybe. Perhaps. Perhaps worse...

We have our plan for what comes next, and we should have a giant head's up as to when the plunge is nearing its end. Before then, we expect the coming days to be very tricky for most people with money in the financial markets, and, perhaps, even worse for those people who have little clue as to how the stock market really effects their daily lives. It's one thing to be scared witless while playing a potential profit opportunity that blew up, and something else much more onerous to suffer a hard squeeze of the coronaries when you aren't even sure why you're experiencing such emotion and have no money directly on the line. But fear it the average Joe and Jane will, whether they have money at risk or not.

We hope that our words - and, more importantly, our actions - have helped you weather the plunge so far to date from both a financial and emotional stand point. We have studied history. We have studied crashes. We have built a system designed to handle any situation. We are not surprised by the action this year. Just as we are not surprised by how well our portfolios have acted. You have to look no further for evidence of what we should have expected during a big bad bear market plunge, than seeing how our strategies handled the 1987 and 2000-2002 bear market plunge years. Visit the archives to see annual rates of change of all of strategies that we published around the Christmas and New Year period last year. Then compare to how our portfolios have done this year. We think it makes interesting, insightful, viewing.

Have a good weekend. Take a deep breath. This is probably going to get worse before it gets better, but, better days, and profits on longs, are rapidly coming our way. But first: the capitulation plunge end game...

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Stock Market in Crash Mode

Trader Talk
The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, confirmed with a very bearish leadership profile, with 23 stocks making new 52 week highs versus 1,103 stocks making new 52 week lows.
The 4% rule remains bearish, while Federal Reserve policy remains bullish. The VXO volatility indicator closed the week at 51.8, continuing the bull market for fear. The primary Elliott wave count suggests the wave 3 of 3 meltdown run has moved into the crash phase, with the next couple of weeks prime time in that regards.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.


Summary:

Once again we start the weekly summary regarding trading action this week with what we wrote to start last weeks update, and the week before that: "WOW!"
The Treasury and FED finally got the bailout package approved on Friday, with that success failing to prevent the stock indexes plunging near 10% on the week. If $700 billion recapitalization of the banks is not enough to force the bears to capitulate or the bulls to get excited, then what is out there that can? The economic news remains grim, and that is the real story behind this week's trading action. We're in a crash run, plain and simple. This will probably be over later this month, early next, with this week's terrible action week two of a potential four week meltdown. One key item to keep an eye is the financial crises around the world. European banks are in danger of collapsing for real here - despite $600 billion cash infusion from the FED THIS WEEK! - and their central bankers and political leaders meet this weekend to discuss the crises. Our view remains that we are in a bear market of some historical proportions, with a retest of the 2002 bear market lows our target for this down-leg of the bear. The FED may pull-off a surprise rate cut, potentially coordinated with a worldwide move to cut interest rates. Do not be surprised to see sellers gleefully jump on board any and all rally attempts going forward, even one induced by a surprise rate-cut. While the VIX fear index has spiked to above 50, that contrarian sentiment gauge reached 150 back in the 1987 crash, and this is much worse than that. Thus we continue with our theme that we've seen nothing yet, and capital preservation remains job one. We will survive this, and trend followers who protect capital here should be in fine shape to pick up some super attractive assets once we hit bottom. Buy low sell high, what a concept.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

Still a Bear Market

Trader Talk

The major stock indexes enjoyed a partial rebound of yesterday's mega losses, though volume was a tad light for such gains.

Officially, the NASDAQ advanced 5.0% on 2.4 billion shares, while the Dow Industrials rose 4.7% on NYSE volume of 6.1 billion shares. The leadership profile remains very negative, with 23 stocks making new highs versus 604 stocks making new lows.

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading Indicator. We have no new trades at this time.

The bulls stepped up to the plate today to prevent a follow-through to yesterday's misery, temporarily delaying any crash run of the quick type. Hopes are rising that the red ink yesterday will move Congress toward a YES vote on the bailout package. We continue to believe that such a focus on the bailout misses the point of a stock market in trouble due to fast-approaching recession. Thus any and all rally attempts going forward should soon fail. Indeed, yesterday's collapse landed in five waves, while today's partial recovery in three. That's classic bear market action that should lead to continuation of lower lows and lower highs. The stock indexes closed at a point where further gains are going to be difficult to come by. A retest of the 2002 bear lows remains our downside target for this leg of the bear.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Weekly Trend & Trade Review

Trader Talk

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with a failure of the bulls to engineer a 2%+ follow through advance to trigger a new buy from this very important confirming indicator. The leadership profile remains negative, with 20 stocks making new 20 week highs versus 484 stocks making new 52 week lows.

The 4% rule remains bearish, while Federal Reserve policy remains bullish. The VXO volatility indicator closed the week at 39.4, continuing the up-spike in fear. The primary Elliott wave count suggests the wave 3 of 3 meltdown run remains underway, with the current sideways churn part of a minor wave 2 prior to the start of the meltdown crashing wave 3 of wave 3. If so, we remain on the cusp of a stock market crash of historical proportions.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

Once again we start the weekly summary with what we wrote to start last's update: "WOW!"

The Treasury and FED propose to prevent an absolute melt-down of the financial markets with a $700 billion mega infusion of capital to Wall Street. Congress says YES. Then voters go ape on the notion of bailing out Wall Street and idiot individuals who bought more house than they could afford, with voter resistance forcing one significant portion of Congress - House Republicans - to say NO WAY. OK, but don't the democrats control Congress? Yes. Can't they just push the vote through without the House Republicans? Yes. So why the big deal? Why the stall? If it's so important - saving the financial world from doomsday, and all that - then why not go ahead and do the vote already? Perhaps they fear a revolt in the election, with the dems appearing to use a massive tax and spend program to socialize Wall Street. Not something many candidates would want to run on in 2008.

Politics aside, both the bull and bear cases we outlined last week remain intact, with the reaction post decision from Congress this weekend on the bailout package the Big Kahuna that decides where we go next. An outright crash in the non-too-distant future is well within expectations here, even if the financial markets are to do just fine going forward from a structural sense. Bear markets precede recessions, and once they have run their course those prolonged periods of falling stock prices are followed by prolonged periods of rising prices as the new bulls takes hold. What the debate is regarding the financial system collapsing - or not - refers to a deflationary collapse and economic depression. Heck, we're only at the 20% of loss level for the stock indexes from the October 2007 peak, and 30% is more the norm in cyclical bear markets. Indeed, 1973-1975 saw a 50% bear loss without a depression. And 1987 a 50% loss without even seeing a recession, let alone a depression. With 2000-2002 experiening a 80% loss for the NASDAQ without the economy flipping into recession. So further losses here can easily land even if the bailout package gets the nod from Congress and goes on to proves itself a massive success.

If we have it wrong and the bulls have it right, then our indicators will turn positive and we'll all be heralding the Paulson plan as our savior as the new bulls unfolds and we all get to party again like its 1999. So relax, and enjoy the political spectacle this weekend, and see what the nervous nellies do with the news that is sure to land between now and the open Monday.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Weekly Trend & Trade Review

Trader Talk

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with the lower volume on the Friday surge non-confirming the 2%+ set-up advance delivered on Thursday. Still, the bulls have a shot at turning this very important confirming indicator positive if they can engineer a 2%+ high volume follow-through advance sometime next week. The leadership profile did turn positive on Friday, with 443 stocks making new 52 week highs versus 283 stocks making new 52 week lows.

The 4% rule remains bearish, while Federal Reserve policy remains bullish. The VXO volatility indicator closed the week at 33.6, continuing the up-spike in fear. The primary Elliott wave count suggests the wave 3 of 3 meltdown run remains underway, with the current rally pop part of a minor wave 2 prior to the start of the meltdown crashing wave 3 of wave 3. If so, we remain on the cusp of a stock market crash of historical proportions.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

What can we say about the action this week other than to say "WOW!" The big question is what does all the violent ups and downs mean? Let's split the answer to that question into two parts, with the first looking at how stock market bottoms are formed (AKA the bull case,) with the second part focusing on what we're seeing now in relation to how bear markets usually unfold as bull hopes meet reality of imploding fundamentals (AKA the bear case.)

Bull case: Bears end after a capitulation that causes a huge spike up in fear as measured by the VIX as everything gets way oversold in a clear show of panic, followed by a vicious rebound, all following prolonged cash-infusion actions from the FED. Clearly all of those landed this week. The number of stocks making new highs have also eclipsed the number of stocks making new lows. So the bottom is in? Perhaps, perhaps not.

Bear case: The AK indicator remains negative, as does the 4% rule, and the accumulation profile (due to the lack of volume on Friday's big advance.) Breakdown/pullback are the hallmarks of bear market, with both often landing in vicious camp, which we clearly saw this week. Thus the technicals overall say the bull push has so far failed to deliver what is needed to turn a bear into a bull. The internal wave count suggested the NASDAQ was due a big recovery bounce before the next leg of the bear lands for real, and we certainly saw that Thursday and Friday. Is the repeat of the RTC bailout plan a game-changer? Maybe - at least in the short term - but probably not longer term. If the investment world loses a couple of trillion dollars, and the US government buys back some of that busted debt, does that mean the now very scared investment world sitting on the edge of catastrophe will go back to business as usual once the debt problem has been shifted from under Peter's cup to under Paul's? Or will the investment companies who have experienced the horror that 30 times leverage can deliver take that money simply to get rid of the busted crap so their balance sheets are more like 15 times leveraged? If so, the investment world is still not healed despite today's promises of massive cash infusions, as no one will be lending money to anyone in large amounts even after the busted debt has been taken off the balance sheet. Thus government money simply goes into the financial black-hole of disappearing money, and Wall Street is still closed for business, and still in need of huge inflows, as 15 times leverage is still a HUGE problem. Indeed, the current action from the FED and Treasury ensures that the investment banks have to put a price on all this busted debt, which means they can no longer hide behind their lies of how things really are. Which means the government has put a date to the day of reckoning where we get to see who has enough money to survive and who doesn't.

Our take: We simply cannot believe Wall Street, businesses, consumers, or investors, are going to take on debt like they have in the past to party-on like its 1999, nor for the US government to print money to drop from helicopters to fill consumers wallets. Thus the system should remain wounded, and the over-leveraged weak still on their way to bankruptcy. Worse, the economy is not even in recession yet. Wait until losses start to pile up from side of the equation. Wait until consumers loses their jobs as unemployment rises. There are only two ways out of this mess: put money in real people's wallets so that they can buy houses, and cars, and everything else - AKA reignite the party - or else let prices collapse as the weak get taken out so the rest of us can buy good assets cheap to go on to be winners on the rebound. The deleveraging process will ensure Wall Street remains wounded, and the fast-approaching recession will ensure that things get even darker going forward.

In short, we've seen nothing yet, and capital preservation remains the key.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Stock Market in Crash Position

Trader Talk

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, confirmed with a bearish leadership profile, with Friday's close yielding 61 stocks making new 52 week highs versus 367 stocks making new 52 week lows.

The 4% rule remains bearish, while Federal Reserve policy remains bullish. The VXO volatility indicator closed the week at 29.3, showing yet another up-spike in fear. The primary Elliott wave count suggests the wave 3 of 3 meltdown run has begun. Waves 3s are the territory of stock market crashes of historical proportions.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

The technical action this week was flat-out horrible. The fundamental news was equally horrid, with Lehman Brothers and AIG both looking like they better get some hard cash soon or else face a bankruptcy filing. Hurricane Ike looks like a summer shower compared to this financial tsunami. The FED meet on Tuesday, but what can they do that they haven't already done or tried? There's not much to add this ghastly set-up, except to reiterate our belief that preservation of capital is an absolute must at this critical, treacherous, juncture.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Bear Growls, Lehman Looms

Trader Talk

The major stock indexes took it on the chin once again as important support of the 50 day MAs were breached. Volume was once again heavy.

Officially, the NASDAQ fell 2.6% on 2.6 billion shares, while the Dow Industrials dropped 2.4% on NYSE volume of 7.3 billion shares. The leadership profile remains negative, with 103 stocks making new highs versus 575 stocks making new lows.

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading Indicator. We have new trades below.

The technical evidence continues to mount that the next leg of the bear market is underway. Since this one should be an Elliott Wave 3 of 3, we should expect the crash set-up pattern to unfold over the next couple of weeks. The financial sector remains the primary problem for the markets as they simply cannot attract money into their businesses to cover ever-increasing losses in their leveraged debt speculations gone wrong. No money to counter big losses means bankruptcy. Lehman appears to be the next to go, to follow on from Fannie, Freddie, and Bear Stearns.

Many more should follow, with any domino follow-through effect that accelerates providing the fundamental back-drop of a bona-fide stock market crash that the Elliott Wave count says now is in play. The volatility this year has brutal to both bulls and the bears, though we've seen nothing yet, when matched against what is fast heading our way.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Jury Out on Bull / Bear Battle

Trader Talk

The major stock indexes traded back and forth the unchanged level today, with a mixed close run on higher volume. Officially, the NASDAQ fell 0.7% on 2.2 billion shares, while the Dow Industrials rose 0.1% on NYSE volume of 5.1 billion shares. The leadership profile remains negative, with 100 stocks making new highs versus 218 stocks making new lows.

The short term momentum oscillators remain negative, non-confirming the bullish stance of the AlphaKing Trading Indicator. We have no new trades at this time.

The technical set-up remains the same, with both the S&P500 and Dow Industrials challenging and bouncing off their 50 day moving averages today. The bull/bear battle to dictate the trend for the remainder of the year is held hostage to the current back and forth along those MAs. Commodities continue to collapse, and we reiterate our warning from earlier in the year that these cyclically sensitive groups should be avoided at all cost on the long side. If the bear returns from here all stocks should collapse, including commodity stocks. If the bull continues to run then money should move out of the lagging commodity stocks and into sure growth prospects such as pharmaceutical type of stocks. We do believe the bears will see a big win before the year is out, though we continue to see one more blast-off rally to the 200 day MAs before the end comes for real.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Weekly Trend and Trade Review

Trader Talk

The short term momentum oscillators remain negative, non-confirming the bullish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains positive, with zero distribution days since the new buy was issued. The leadership profile remains mildly negative, with Friday's close yielding 65 stocks making new 52 week highs versus 127 stocks making new 52 week lows.

The 4% rule remains positive, confirmed with bullish Federal Reserve policy. The VXO volatility indicator closed the week at 22.6, remaining in the complacency camp. The primary Elliott wave count continues to suggest a wave 2 counter-trend advance within a bear market continues to unfold. If so, the wave 3 melt-down run should start once the near double top, or actual, double topping pattern completes. A move above the October 2007 highs negates this bearish view, and would confirm a new cyclical bull market underway. Such new highs are a very long way away.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls after a modest summer rally attempt stalls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

Overall we would suggest the trading action this week should be forgotten as meaningless. The news was mediocre - for a change - and trading run on super light volume. Every rally was met with a sell-off, and every sell-off met with a rally. Next week - following the markets being closed on Monday for the Labor Day holiday - should be more normal in both trend, meaning, and volume. While our indicators remain bullish, our overall view is that we are in some kind of bear market counter-trend advance, and as such we believe it is simply a matter of where the stock indexes run into trouble, rather than if they falter. That said, the overall technical set-up ex-volume suggests another big leg up for the stock indexes is the more likely outcome going forward. Don't try to over think things at this juncture, as there simply is not enough information to make an accurate assessment of what comes next. Patience, Grasshopper, patience. And, yes, I will take another cold one to go with that dog. Happy Holiday, fellow workers.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Bulls get Benefit of Doubt

Trader Talk

The major stock indexes traded back and forth the unchanged level today, with the stock indexes once again experiencing super light volume.

Officially, the NASDAQ fell 0.2% on 1.5 billion shares, while the Dow Industrials rose 0.2% on NYSE volume of 3.5 billion shares. The leadership profile remains negative, with 54 stocks making new highs versus 220 stocks making new lows.

The short term momentum oscillators remain negative, non-confirming the bullish stance of the AlphaKing Trading Indicator. We have a new trade below.

The bulls are trying to hold support. The bears are trying to keep the S&P500 and Dow Industrials from a breakout above the 50 day MAs. Is the sideways churn over the past month a mini head and shoulders top that is destined to result in a collapse? Or is it a sideways triangle to consolidate the rally gains off the July 15 lows? (Triangles are usually continuation patterns, which means an upside breakout is likely to start the next leg of the rally.) Both are possible, and the battle for the stock market trend is held hostage to that decision. While the low volume and modest list of stocks making new lows tip the odds of victory with the bulls, the fast approaching September/October period has the bear's mouth watering. Tricky times, but a victory answer should land in the non-too-distant future.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

A Weak New Bull Market

rader Talk

The short term momentum oscillators remain positive, confirming the bullish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains positive, with zero distribution days since the new buy was issued. The leadership profile remains negative, with Friday's close yielding 59 stocks making new 52 week highs versus 153 stocks making new 52 week lows.

The 4% rule remains positive, confirmed with bullish Federal Reserve policy. The VXO volatility indicator closed the week at 20.5, remaining in the complacency camp. The primary Elliott wave count continues to suggest a wave 2 counter-trend advance within a bear market continues to unfold. If so, the wave 3 melt-down run should start once the near double top, or actual double topping pattern completes. A move above the October 2007 highs negates this bearish view, and would confirm a new cyclical bull market underway.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls after a modest summer rally attempt stalls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

The corrective action and Friday bounce this week continues to signal the Elliott Wave 2 counter trend topping move is not yet complete. A move to, and possibly above, the 200 day moving averages for the S&P00 and Dow Industrials (charts below) is very possible. The positive reaction to news this week - bad news, very bad news, scarily ugly news, mediocre news, and even positive news - of the stock indexes that held support, and even managed a rally off such support, argues strongly that the current rally has much further to run. The close above the 50 days MAs for the S&P500 and Dow Industrials - while the 20 day MAs are in the process of crossing above the 50 days - also argues that higher prices lay ahead. The low volume on the advance does have us worried about this bullish potential, as does the low number of stocks making new highs.

Thus overall neither the bulls nor the bears appear to have a grip on the trend, and this market badly needs some news to move prices away from the current sideways churn. Fannie Mae and Freddie Mac badly need some money from the US government - and soon, AKA this weekend - which could be the straw that finally breaks the bear's backs (at least over the shorter and more intermediate term.)

While we are agressively positioned long - in line with our trend following indicators - the overall technical set-up suggests we remain in a bear market rally, with the question of when the bear returns, rather than if. The overall technical set-up also suggests the rally has further to run. And perhaps the high volume and rapidly increasing leadership and participation can land going forward as the stock indexes trend higher. That is not the usual pattern seen at bear bottoms, but, hey, we'll take what we can get at these challenging times.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Day 3 of Market Correction

Trader Talk

The major stock indexes fell hard once again today on on-going weakness in the housing sector, along with higher than expected inflation, doing nothing to ease trader jitters. Volume was a tad higher than yesterday.

Officially, the NASDAQ fell 1.1% on 1.8 billion shares, while the Dow Industrials dropped 1.1% on NYSE volume of 4.2 billion shares. The leadership profile remains negative, with 42 stocks making new highs versus 286 stocks making new lows.

The short term momentum oscillators remain positive, confirming the bullish stance of the AlphaKing Trading Indicator. We have no new trades at this time.

The relatively low level of stocks making new lows, along with reasonably benign volume on down-days, suggest the current stock market weakness is a normal corrective pullback within an on-going up-trend. We are getting close to levels where the buyers would be expected to step forward, and day four on one-way moves often provide great turning points. Today was day three of the recent selling pressure. The big question with entry trades on day four is whether the low lands at the open, or at the close. Both work well in testing. Our plan is to shoot for the close as being the low, and thus we'll wait till tomorrow's update to switch the unleveraged QQQQ long trade for the Index portfolio to the leveraged QQQQ long one (QLD.)

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Cyclical Bull Market Pattern

Trader Talk

The short term momentum oscillators remain positive, confirming the bullish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains positive, with zero distribution days since the new buy was issued earlier in the week. The leadership profile also remains negative - and a real worry - with Friday's close yielding 141 stocks making new 52 week highs versus 167 stocks making new 52 week lows.

The 4% rule remains positive, confirmed with bullish Federal Reserve policy. The VXO volatility indicator closed the week at 21.5, moving back into the complacency camp. The primary Elliott wave count continues to suggest a wave 2 counter-trend advance within a bear market continues to unfold. If so, the wave 3 melt-down run should start once the near double top, or actual double topping pattern completes. A move above the October 2007 highs negates this bearish view, and would confirm a new cyclical bull market underway.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls after a modest summer rally attempt stalls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

The stock market advance this week confirms the Elliott Wave 2 counter trend topping move is not yet complete. A move to, and possibly above, the 200 day moving averages for the S&P00 and Dow Industrials (charts below) is very possible. As is the bear case being completely wrong. Since our indicators have turned bullish, and we will remain hopeful longs while-ever that trend remains in play - and really hopeful longs if the internal momentum picks up going forward - we thought this a good time to go over the normal cyclical bull pattern, so we can track current market trends with what should be happening based on history.

Cyclical bull markets follow every cyclical bear markets. We've had - or are still in - a cyclical bear market that started last October. Bears usually last 6 to 12 months, with average drops near the 20-30% loss range for the stock indexes. Thus both time and depth of losses do open the door to the bear having run its course here. As does the FED super-stimulus, and capitulation washout going into the July 15th low. No guarantee, though they are encouraging signs for the bull case.

The economy going into bear market lows is generally horrible, and expected to get worse. Late bears and early bulls are especially painful to cyclical stocks, such as home builders, industrial firms, and commodity related sectors, such as precious metals and energy. The normal pattern is for those sectors to continue to fall as the stock indexes recover from their bear lows. That initial rally of the new cyclical bull market is usually led by non-cyclically sensitive growth stocks - those stocks with sales and earnings not directly effected by the economy - such as pharmaceutical and biotech stocks, consumer staples, and select tech stocks. Small cap growth stocks - which get beaten down senseless during the bear market - are often the cheapest and fastest growing companies and thus often provide the greatest gains going into the early phases of new bull runs.

New bull markets act like they have been bitten by the Energizer Bunny, and keep going and going and going, despite seemingly horrible news landing all over the place. This climbing the wall of worry continues as the new leadership stocks start to go parabolic and the indexes really start to hum as it becomes obvious to all the economy is improving and a new bull underway. Then we hit a tough corrective phase as super bullish investor sentiment gets washed out. This opens the door to the second phase of the new bull, with investors surprised to find lagging cyclical type stocks - industrials, precious metals, energy - beating the prior superstar biotech, pharma, tech and consumer staple growth stocks on the second leg up. And then the economy and financial markets get too hot as the second stage of the bull also goes near parabolic, forcing the FED to raise interest rates to smack some sense into traders, investors, and speculators, and the whole cycle starts over again as the new bear is born out of peaking bubbles all over the place (with the economy zooming along, and expected to zoom along forever and forever - smack before a surprise recession lands due to higher interest rates.)

One thing to note about the above normal cycle, is the effect of bubbles and imploding bubbles, which seem to have a life of their own outside of normal trends, and can often distort gains and losses seen as each sector - cyclical and non-cyclically sensitive - go through the ups and downs of their normalized cycle. For instance, energy and precious metals usually peak along with the stock indexes going into bull tops, and thus the recent move for oil from the 70 of last fall to its 147 peak just a few weeks ago was a surprise as far as the normal cycle was concerned. Just as the home builders should have gotten crushed going into the 2000-2002 bear slowdown, yet flipped into super-bubble mode as consumers gobbled up super-cheap FED interest rates to buy their dream McMansion. Demographic trends also played a part of that surprise housing bubble despite the 2001 recession. Just as the construction build up prior to the Chinese Olympics played its part in extending the energy and commodity bubbles this time around.

So while the normal pattern does have great influence in stock market trends, so too does the presence of bubbles and imploding bubbles, which can have an agenda away from normalized expectations. So here we are with commodities falling hard now the China commodity bubble appears to have popped - thus in-line with expecations as the economy weakens - while health care, technology, small cap, and consumer staple growth stocks start to outperform - thus in-line with expecatations as their earnings are not connected to the overall economy. This first phase should last 12-18 months, with cyclical stocks lagging in extended bear phases during that time.

If the usual pattern of new cyclical bull markets is currently in play, then we can expect an acceleration of upside momentum, with an ever-expanding list of stocks making new highs, with volume on rallies much higher than we experience on corrective dips. The stock indexes should also move to new highs over time. If we're still in a bear market, then none of the above bullish chips will fall into place, and our trend-following indicators will trigger a sell signal as downside momentum starts to pick up steam. So far the bulls are hanging in there, but no one is smoking any cigars as yet.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

New Buy Signal for Stock Market

Trader Talk

The major stock indexes fell today as more financial companies reported heavy losses and write-downs. Volume was interestingly lighter than yesterday. The leadership profile has flip-flopped back into negative territory, with 117 stocks making new highs versus 202 stocks making new lows.

Officially, the NASDAQ fell 0.4% on 2.1 billion shares, while the Dow Industrials dropped 1.2% on NYSE volume of 4.7 billion shares. The short term momentum oscillators remain positive, confirming the now BULLISH stance of the AlphaKing Trading Indicator. We have new trades below to exit all short positions, and to begin the dollar cost averaging process of entering new long picks.

The stock market has been in a bear market since October of last year. Peak losses were over the 20% range. Thus both time and price destruction commonly seen during bear markets has been within expectations this time around. The FED has been aggressive in pumping money into the financial system, while the financial markets experienced a capitulation of sorts, with record numbers of stocks making new lows, and the volatility index almost hitting the wash-out 40 level. Thus the ingredients are present for the bear market to be over, and a new bull market underway.

Fundamentals lag stock market and economic trends, so the bad news may not be telling the real story. Of course the bears could have it right, and our new buy signal quickly turn into a whipsaw sell in the non-too-distant future, but one could have written that at every positive turning point the stock market has experienced in history. The most important element when it comes to making money in the financial markets over the long term isn't whether this or that signal proves to be real versus a failed whipsaw one, rather it is about keeping losses low on the failures while letting the winners and the gains run when the new trend turns out to be the real deal. Our research shows that the AK Trading Indicator is the best there is at delivering that high gain/low loss requirement. It has spoken, and we are acting. The QQQQ long position for the Index portfolio will be changed to a leveraged long ETF on any pullback close to the 50 day MA for the NASDAQ going forward, while we will add new long positions to the other portfolios each day until we are fully invested, or our trend following indicators turn negative.

Kevin Wilde, Chief Trading Strategist AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Weekly Trend and Trade Review

Trader Talk

The short term momentum oscillators remain positive, non-confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with a failure of high volume to confirm Friday's advance as a follow-through day that would have triggered a buy signal for this very important confirming indicator. The leadership also remains negative, with Friday's close yielding 130 stocks making new 52 week highs versus 222 stocks making new 52 week lows.

The 4% rule remains positive, confirmed with bullish Federal Reserve policy. The VXO volatility indicator closed the week at 21.9, moving back into the complacency camp, and remains contrarian bearish. The primary Elliott wave count continues to suggest a wave 2 counter-trend advance within a bear market continues to unfold. If so, the wave 3 melt-down run should start in the non-too-distant future as wave 2 completes.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls after a modest summer rally attempt stalls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

The stock market advance this week confirms the Elliott Wave 2 counter-trend topping move is not yet complete, though may be very close to doing so. The NASDAQ advance, in particular, looks about done, as all waves appear in place. The Dow Industrials and S&P500 closed smack on their 50 day MAs, and whether they too break out and launch to the upside to mimic what happened to the NASDAQ, or if they stall here and the slide resumes, should be answered early next week. The lack of volume on the rally continues to argue that we are experiencing nothing more than a bear market trap for the bulls.

Our trend following indicators may also get caught up in this fool-the-most-people move, but as trend followers we will gladly trade in line with our indicators. That means holding shorts if the stock indexes begin to slide early next week, or move to the long side of the market on any failure to reverse as a buy signal is triggered. If such a buy signal turns out to be the real thing, then we'll happily make money being proven wrong in our thinking that we remain in a bear market. If such a buy signal proves us correct that the bear is alive and well - by triggering a sell signal soon after the buy - then we'll gladly reverse our positions and accept such volatility has part of the process of making money over the long term using a research proven trend following approach.

The goal is to make a solid return when the trend delivers on a new trading signal, while keeping losses small on failed signals, rather than being proven right all the time. No one, no investment system, can do the latter with any degree of success, and trend following is the next best alternate to having a time machine that can give us tomorrow's hindsight today. The average annual rate of return for the AK Trading Indicator - using the NASDAQ Index to gauge results - is 15% long only (unleveraged,) 30% (leveraged,) and 19.7% long/short (unleveraged,) 35.2% leveraged (from 1973 through the end of 2007.) The average trade is close to 17% on wins, versus 3% on failed signals (unleverged,) 34% on wins versus 6% losses (leveraged.) Thus results since the June 24th sell signal are very much in line with expectations.

We will not act before our indicators tell us to, as there have been many times in history where a new trend change signal was close to being signaled yet the signal never happened, as one aspect of the AK Trading Indicator we like is its ability to only limit signal changes to those that likely matter the most. Annual trading results of all our portfolios are shown in the archives of our Updates between 12/24/2007 and 1/2/2008.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Another One Day Wonder??

Trader Talk

The major stock indexes enjoyed a solid rally today - as expected - on news the FED left interest rates unchanged - also inline with expectations. Volume was heavier than yesterday, though not overall that impressive.

Officially, the NASDAQ advanced 2.8% on 2.4 billion shares, while the Dow Industrials rose 2.9% on NYSE volume of 5.5 billion shares. The leadership profile remains negative, with 117 stocks making new highs versus 229 stocks making new lows.

The short term momentum oscillators are on the cusp of turning positive, while the AlphaKing Trading Indicator remains in sell mode. We have no new trades at this time.

Stock market bulls followed their usual pattern of pushing hard on FED announcement days, and while the gains were quite impressive, it remains to be seen whether this is a movie we have seen many times before of late (which means we drop hard going forward,) or this is the start of something different. The key here, like the key to all stock market bottom attempts worth noting, is the presence or absence of a 2%+ high volume follow-though advance going forward to confirm today's accumulation day. In the recent past, 2%+ days have landed in singular form, and new lows have landed shortly-thereafter.

If this indeed is going to go down as an it's-different-this-time bull nirvana event, then the big follow-through should land very soon. The internal wave count says pretty much the same thing: no follow-through and the super-bear pattern remains intact for the short, medium, and long term. A big follow through and the short term potential would call for a run toward the 200 day MA. Thus we are firmly in the land of indecision that will soon lead to an extremely important and meaningful outcome. Every breakout to new highs has been proceeded by a failed double-top attempt, while the bear market pattern of lower lows and lower highs are littered with double top and near-double top successes. Tomorrow should go a long way to answering this trend/momentum dilemma.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Don't Fight the Tape, the Trend

Trader Talk

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, confirmed with bearish leadership, with Friday's close yielding 67 stocks making new 52 week highs versus 167 stocks making new 52 week lows.

The 4% rule remains positive, confirmed with bullish Federal Reserve policy. The VXO volatility indicator closed the week at 24.3, and remains contrarian bearish. The primary Elliott wave count continues to suggest a wave 3 melt-down run remains underway, with the current wave count wave (i) of wave (iii) of Wave 3, and an out-right crash in the wave (iii) of 3 should land in the non-too-distant future as the wave (ii) counter-trend push exhausts itself the middle part of next week.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls after a modest summer rally attempt stalls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

The stock market trend in bear markets is one of breakdown to new lows through major support followed by partial recovery bounces back into that broken support, which leads to another breakdown to new lows, with this downward stair-step pattern of lower lows and lower highs maintained until complacent bulls are forced into a capitulation panic that leads to a real or near-real crash. A VIX spike to 40 and above is the indicator that suggests such a final capitulation has landed, as does a completed Elliott Wave Cycle. The action this week suggests the bounce off the July 15 low has stalled at such resistance of broken prior support, and the next down-leg underway. Since the sell-off into the July lows has the look of an Elliott Wave 1, and the rebound thus wave 2, what should land next is the meat of the bear, which should lead to a retest of the 2002 bear lows. The summer rally appears to have stalled, and now August is here, we are fast moving into the very tricky months of September and October, when the stock markets crashing lows are often logged.

The economic news continues to suggest we are headed toward - or in - a recession, and now the commodity related stocks and futures are in full retreat, the financial markets have to deal with imploding bubbles all over the place, with leveraged debt players going belly-up in multiple industries. We are trend followers who would like nothing more than to be buying big here, and writing cheery stories about how things look so great, but that is not the message the financial markets are giving us. When the technicals turn bullish we will turn bullish. Sorry if this is not what you want to hear, but our mission is to keep you on the right side of the trend and to help make you money over time, rather than to entertain or tell you what you want to hear. Capital preservation remains key to the next few tricky months, which have the potential to deliver some very large red ink losses to those who stubbornly continue to fight the trend.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

3 Waves Up, 5 Waves Down

Trader Talk

The action today was the exact opposite of yesterday where a rally was followed by a sell-off, which was followed by a late-day surge, while today we saw a drop at the open, a rally intra-day, followed by a late-day plunge. Volume was on par with yesterday.

Officially, the NASDAQ fell 0.2% on 2.4 billion shares, while the Dow Industrials dropped 1.8% on NYSE volume of 5.4 billion shares. The leadership profile remains negative, with 103 stocks making new highs versus 225 stocks making new lows.

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading Indicator. We have no new trades at this time.

The overall pattern remains solidly bearish, with the downward stair-step pattern of lower lows and lower highs remaining intact. So too continues the bearish trend of five wave sell-offs followed by three-wave partial recovery bounces. Today's action looks like a five wave down move followed by three-waves up topping action. If so, it should be all downhill from here. The economic news showed weaker than expected GDP growth, and weaker than expected unemployment numbers.

The Big Kahuna of the latter lands prior to the open tomorrow, and could be the last straw that opens the selling flood-gates to confirm the super-bearish potential of the Elliott Wave set-up. As trend-followers with major skin in the game, we look forward to the next stock market buy signal, though so far there appears to be little in the way of hope for such bullish nirvana. When that changes we will gladly change our stance from bear to bull. Till then, watch out below....

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

No More Truck Leasing?

Trader Talk

The major stock indexes opened brightly to follow on from yesterday's rally, only to fall hard intra-day, before a late-day recovery bounce helped land another close in the green. Volume was on par with yesterday.

Officially, the NASDAQ advanced 0.4% on 2.3 billion shares, while the Dow Industrials rose 1.6% on NYSE volume of 5.6 billion shares. The leadership profile remains negative, with 120 stocks making new highs versus 225 stocks making new lows.

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading Indicator. We have no new trades at this time.

The overall pattern remains solidly bearish, with the downward stair-step pattern of lower lows and lower highs remaining intact. So too continues the bearish trend of five wave sell-offs followed by three-wave partial recovery bounces. Today's action leaves the S&P500 at the Fibonacci 80% points lost during the prior slide level. The bulls are dead in the water while the stock indexes remain below last week's highs, and even if they were able to engineer a breakout above those keys levels, the down-trending 50 day moving averages are moving fast into position to stall such an advance in its infancy.

We saw interesting snippets of information travel across the financial media today that got surprisingly little commentary. The major car companies and major lending companies anounced they will no longer be offering car leases to consumers or businesses. This is due to vehicles at the end of the lease being worth much less than the car companies and lenders thought they would be worth. That leaves the lenders and car companies in yet another deep hole. The current plan to stop car leases altogether seems to us to radically change the car buying and overall economic landscape. Consumers commonly take on three types of debt. The largest debt being used to buy a home. The next largest to purchase or lease a car. The next largest revolving credit card debt.

The first two of them - houses and now cars - have essentially bankrupted many big time lenders and players involved the business of lending to consumers for those big item purchases that are the cornerstone of the American Dream. One wonders how the car companies will deal with no car leasing business, or even how they can survive taking another hit as leased cars already out on the streets get traded in for less than they are worth as the lease agreement expires. One also wonders when credit card debt - which is the last bastion of consumer credit still standing - also takes a hit.

Hard to imagine that this massive financial instrument can survive unscathed from the credit bubble collapse when the other two big sectors of consumer borrowing have taken such a beating. While the financial media seemed to ignore today's news on car leasing troubles, we believe it is simply a matter of time before the headlines are filled once again with the grim reality that the big players in the debt financing business have taken on more than they can chew. Needless to say, we remain bearish in-line with our trend indicators.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Still a Bear Market

Trader Talk

The major stock indexes were down 2% yesterday so of course today they were up a similar amount, with such volatility no doubt good for the business of anti-stomach ulcer drug makers. Officially, the NASDAQ advanced 2.5% on 2.3 billion shares, while the Dow Industrials rose 2.4% on NYSE volume of 5.4 billion shares. The leadership profile remains negative, with 80 stocks making new highs versus 233 stocks making new lows.

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading Indicator. We have no new trades at this time.

The overall pattern remains solidly bearish, with the downward stair-step pattern of lower lows and lower highs remaining intact. As trend followers we do not need to be able to predict the markets to make money, and certainly no one can predict stock market turns and trends with any high degree of success over the long term. With that said, here's what we believe to be the higher probability plays going forward. The first is based on Elliott Wave and our experience of the breakdown/pullback historical pattern of expectation. That says since the S&P500 fell in five clear waves over four days prior to today's bounce, and today the S&P500 shows a Fibonacci 50% recovery of points lost during the prior slide, what should follow very soon is a continuation of the collapse, all as part of something very bad indeed for those long the market.

The second most likely outcome is based on our experience of technical analysis, which says those 50 day MAs shown in the charts below look mightly enticing to the bulls, and it wouldn't be a major surprise to see those technical-lines-in-the-sand be the final resting place for this counter-trend advance within an on-going bear market. We have seen no sign yet that the stock market wants to flip to bull mode, and we remain very cautious until the investment ducks start to turn for real. The next down move should be much more scary than we have seen so far during this bear, and we believe strongly that it remains a question of when the next down-leg of bear starts, rather than if.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Lower Lows & Lower Highs

Trader Talk

The major stock indexes took it on the chin once again today, with the NASDAQ falling 2.0% on 2.0 billion shares, while the Dow Industrials dropped 2.1% on NYSE volume of 4.3 billion shares. The leadership profile remains negative, with 71 stocks making new highs versus 240 stocks making new lows.

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading Indicator. We have no new trades at this time.

The overall pattern remains solidly bearish, with the downward stair-step pattern of lower lows and lower highs remaining intact. The economic news remains grim, and can only be expected to deteriorate going forward. The Dow Industrials (chart on left below) came close to touching their 50 day moving average a couple of weeks ago, and such resistance points often provide the death sentance to bear market rallies. While one day popping rally days can be expected to pop up from time to time, we expect the red ink bloodletting to pick up steam as the weeks going forward turn into months of bear misery.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Weekly Trend and Trade Review

Trader Talk

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, with a failure of the second 2%+ high volume follow-through advance needed to confirm a new buy signal from this very important trend confirming indicator. The leadership profile remains bearish, with Friday's close yielding 98 stocks making new 52 week highs versus 236 stocks making new 52 week lows.

The 4% rule has turned positive, confirmed with bullish Federal Reserve policy. The VXO volatility indicator closed the week at 24.1, showing some lessening of fear, and remains contrarian bearish. The primary Elliott wave count continues to suggest a wave 3 melt-down run remains underway, with the current wave count wave (ii) of Wave 3, and an out-right crash in the wave (iii) of 3 should land in the non-too-distant future as the wave (ii) counter-trend push exhausts itself.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls after a modest summer rally attempt stalls, while the Presidential cycle remains bullish for the remainder of 2008. The Benner-Fibonacci cycle will remain bullish until 2010, though this prolonged time period may include one or more cyclical bear phases. The AlphaKing combination cycle sees a bear market slump running all the way into mid-December when the next major turn-date is slated to land.

Summary:

While the rally off last week's near crashing lows has been swift, the internal technical set-up appears to confirm the move nothing more than part of a counter-trend rally within an ongoing bear market. The stock indexes have so far retraced a Fibonacci 38% of points lost in the wave 1 collapse, which is the first potential stopping point for Elliott wave 2s. The 50% and 63% Fibonacci retracement levels are near the 50 day moving averages for the stock indexes, which remain the most likely stopping points for this advance. What should follow - once the wave (ii) ends for real (either here or at the 50 day MAs) - is a bona-fide melt-down run and probable crash in wave (iii) of wave 3. The current rally - which should end very modest, if it hasn't ended already - should be the last chance to exit longs and enter shorts ahead of the pending collapse. Things should move very quickly to the downside once wave (ii) has ended, so any portfolio pruning should be done sooner rather than later, as later may never happen. Capital preservation remains the key to the next few tricky months.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Expect More Stock Market Selling Next

Trader Talk

The major stock indexes took it on the chin once again today as news on housing and car sales slapped traders awake to the reality the economy is fast headed toward a recessionary day of reckoning.

Officially, the NASDAQ fell 2% on 2.6% billion shares, while the Dow Industrials dropped 2.4% on NYSE volume of 6 billion shares. The leadership profile remains negative, with 89 stocks making new highs versus 245 stocks making new lows.

The short term momentum oscillators remain negative, confirming the bearish stance of the AlphaKing Trading Indicator. We have no new trades at this time.

The overall pattern remains solidly bearish, with the downward stair-step pattern of lower lows and lower highs remaining intact. The economic news remains grim, as both home sales and home prices continue to plummet. Ford Motor Co. also came out with news they are burning through $1 billion each month as sales of SUVs and trucks continue to collapse. That puts the American car manufacturing icon in jeopardy of running out of money as early as next year.

Technically, we are open to the possibility that the bounce off last week's near-crashing lows has further to run to the upside, especially since counter-trend corrective moves usually come in a three-step format. Thus yesterday's high may very be the first of that three, with the pullback today potentially part of the middle second, before a continuation of the rally would be expected to land to complete the entire corrective move within an on-going bear market. However, an outright crash going forward is not out of the question. Either way we expect a continuation and acceleration of the red ink over the next few days - at least - and we will evaluate the internal technical action for signs of which path is the more likely going forward, adjusting our portfolios accordingly. Such volatility is what bear markets are all about.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Interview with AlphaKing.com Founder

Nov 11, 2006 12:23 ET

Superstar Stock Picker Shares His Secrets and Top Stock Picks

CHARLOTTE, VA -- (MARKET WIRE) -- November 11, 2006 -- We're talking with Kevin Wilde, a six-year investment superstar at Marketocracy.com, who has a stunning stock-picking performance record. The Five Year Rankings, through Sept. 2006, just came out and Kevin placed fourth out of 70,000 investors. "Kevin, how were you able to beat 70,000 investors in the stock market competition run by Marketocracy.com? That seems an incredible feat!"

The simple reason for my success is having a strategy designed to outperform during all market cycles -- up, down, sideways -- one that told me when to buy, hold, or sell to lock in profits. I had my AlphaKing strategy, my systematic approach, and my competitors didn't.

"If it was designed to outperform in all market environments, how did it do in the grueling bear market years from 2000 to 2003?"

The AlphaKing strategy shot to the top of the rankings at Marketocracy.com, and my personal account made money each and every year, despite the bursting of the stock market bubble that caught so many people off guard. And, I did it long only, without shorting any stocks or indexes.

"But how were you able to thrive when so many others lost their shirts?"

I recognized that stocks can go up incredible amounts during the good times, only to retrace all of those gains and then some when the tide turns, often with little reason for the rise, let alone for the fall. So, when building the AlphaKing System, during my research, I looked for ways to recognize when a stock or stock market had peaked, so that I could move into stocks on the rise rather than face the misery of watching profits disappear and turn into losses.

"It sounds like you use some sort of technical analysis to time your moves into and out of stocks."

AlphaKing uses fundamental analysis to screen for those superior stocks that offer the best chance of going up during favorable trends, while using technical analysis to highlight when to buy, hold, and sell these investment gems.

"What indicator do you use to time the entries and exits?"

Of all the findings of the AlphaKing Research Project, the answer to this question is probably the most important of all, though the answer itself is more complex than simply saying choose this or that as the best technical indicator. I had to build my own technical indicator that I call the AlphaKing Trading Signal, since none of the commonly available indicators worked well enough for what I needed. The stock market never goes straight up, then straight down, then straight up again, so it is vital that whatever technical entry and exit system a trader uses is robust enough to be able to handle the churning periods of indecision. It is imperative that traders, portfolio managers, end up with a reasonable profit after a stock or stock market has completed a full bull and bear corrective cycle. The AlphaKing Trading Signal is an amalgamation of trading rules I have found to most effectively handle the complex trading patterns stocks and stock markets undergo in real time.

"Do you charge for access to this indicator at your website?"

Actually, no. You can access all trading signals on the 4,300 most popular stocks for free at http://alphaking.com/ along with a graphical snapshot rating of each company's most important fundamentals. The system doesn't own any stocks when the AlphaKing Trading Indicator is in sell position.

"So the trading signals and fundamental ratings are free on the stocks you can get data on, but you do something different in the portfolios, which are available by subscription. How do you select the stocks that go into the 8-position long or short group, and in the 25-stock long-only small cap group? Do you still use a system, or is there subjective reasoning involved?"

It's a combination of both. There are 4 basic questions that need to be answered before I buy a stock: Market Direction, Company Fundamentals, Short Term Chart, and Long Term Chart.

Market direction is answered by the AlphaKing Trading Indicator. Next, I seek companies with great fundamentals using a quantitative process which takes into account superior growth, value, financial health, and institutional support. In the short term chart, I look for stocks rallying off of strong short term support near longer term moving averages, with favorable volume trends. In the long term chart, I want stocks that are rallying off of longer term support, after a prolonged, multi-year sideways basing process. What is most interesting is the double bottom formation. Fundamentals on the double bottom retest are usually the determining factor whether such support will hold. Stocks with strengthening earnings and good value as the stock is forced to endure a large double bottom retest are apt to be the next stock market leaders during the next rally phases, provided the companies are able to deliver on their earnings forecasts, and the stock market stays clear of any major reversal signal.

"So what is the best way for the individual investor to take advantage of AlphaKing?"

AlphaKing aims to help people make money over time, and I believe the charts, trading signals, model portfolios, and daily summary published at http://alphaking.com/ are a giant step forward for the individual investor. They should use the information in any way they feel it is of help to them. I manage my own money using the system, timing entry and exit of my 401K using the timing signals of the Index portfolio, and my individual stock picks in-line with the GrQ/8 Hedge Fund, and GrQ/25 Small Cap portfolios. Some may want to use the trading signals and fundamental ratings shown in the free chart section as a second opinion or to time buys and sells in stocks of interest.

Very few financial websites provide trackable performance to measure the value of their services. I believe that investors and traders should target only those investment elements and stock selection methods that have proven to have outperformance value over the long term, and how can they possibly do that effectively if there is no performance data they can track? I update the performances of our portfolios each day on the Performance and Portfolios pages, as well as highlighting returns for every trade since 2000 in all 4300 stocks in our database.

"Do you offer services to manage individual investor money?"

I currently do not, though I do plan to open a hedge fund in the future designed along the lines of the AlphaKing 100 index (which you can read more about on the Performance page at alphaking.com). I have partnered with the online stock broker, FolioFn.com, so that investors can trade the larger AlphaKing portfolios for a one-time annual commission of $199, which is a savings of thousands of dollars each year in trading commissions compared to the discount brokers. Individuals have to enter the trades themselves, though FolioFn makes this very easy. The goal of http://alphaking.com is to make making money in stocks as painless and profitable as possible.

For Free charts with trading signals and fundamentals ratings, visit AlphaKing