Stock Market Crash Not out of the Question

Trader Talk

The major stock indexes suffered another pummeling today, reversing yesterday's rally gains - and then some - with volume a tad lighter than yesterday.

Officially, the NASDAQ fell 2.3% on 2.6 billion shares, while the Dow Industrials dropped 2.1% on NYSE volume of 5.2 billion shares. The leadership profile remains very negative, with 63 stocks making new highs versus 449 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, and the main question when and how will this portion of the slide end? Our best technical guess - based on past bear patterns - suggests we are headed for some of kind scary drop below recent support, and that swoon either reverses very quickly on a big spike in the VIX, or, barring such a spike of investor fear landing to help save the day, the stock indexes suffer some kind of melt-down crash, perhaps a bona-fide scary one destined for the history books. Hard down and up before a few weeks of sideways churn is the more probable of the two, though a 1987-style running melt-down is certainly very possible.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

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