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