Wild Stock Market, an end to Naked Short-Selling?

Trader Talk

Results were mixed in the major stock indexes today. The NASDAQ gained 0.1% on 2.8 billion shares as the Dow Industrials lost 0.8% on NYSE volume of 7.3 billion shares. The Leadership profile is extremely negative with 36 new highs and 1,820 new lows - 1,272 of them in the NYSE alone.

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

The Bigwigs talked with Congress today, Paulson, Cox, and Bernanke, while President Bush spoke to the public separately. Serious problems with the U. S. financial system, plus it's an election year. Christopher Cox of the SEC spoke about naked short-selling, a practice in which shares are sold short without borrowing them first. Finally, the SEC has decided to enforce its own rules. We applaud this change, but we don't think for one minute that it will stop stocks from falling. The major indexes rallied hard on the news, only to give much of it back by the close.

We believe the market will fall more before any significant counter-trend rally ensues, so we're holding our short positions for now, and still plan to cover some or all on a capitulation meltdown, and add shorts after any counter-trend rally ends.

Chief Trading Strategist Kevin Wilde will return from vacation next week.

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