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.

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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.

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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.

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Only One Accumulation Day, Need Two

Trader Talk

The major stock indexes traded back and forth the unchanged level once again today, with modest gains going into the close run on higher volume. Officially, the NASDAQ advanced 1% on 2.8% billion shares, while the Dow Industrials rose 0.3% on NYSE volume of 6.5 billion. The leadership profile remains negative, with 133 stocks making new highs versus 187 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 today's action changes nothing in that regards. Both the S&P500 and Dow Industrials smashed below their March lows a few weeks ago - in five waves - and have now rallied back to that former support level in three waves, which suggests that current levels should provide formidable resistance to any attempts at continuing the advance, and thus lower prices lay ahead. We are trend followers who follow the big picture based on historical cycles and signals from major technical indicators, and all of that continues to suggest our bearish view is correct no matter the amount of intra-day, daily, weekly, or monthly volatility.

We experienced one 2%+ mega volume accumulation day advance late last week, and the bulls are dead in the water so long as such rally days land in singular form, rather than the double follow-through variety that signals a change in trend is in progress. Breakdown followed by pullbacks is the normal fare of bear markets, and the current technical set-up suggests that is what we have been experiencing over the past week or so.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.
How to Profit in Bull & Bear Markets
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Goodbye Naked Short-Selling!

Trader Talk

The major stock indexes enjoyed a big rally today. The NASDAQ rose 3.1% on 2.5 billion shares and the Dow Industrials gained 2.5% on NYSE volume of 6.7 billion shares. The Leadership profile improved somewhat, still just 73 new 52-week highs as new lows dropped to 615, still quite negative.

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

Positive news from Wells Fargo this morning was the initial catalyst that drove the financials much higher today (on lower volume than yesterday's dip) as well as more testimony from Federal Reserve Chairman Ben Bernanke, who said Fannie Mae and Freddie Mac are well capitalized. Bear market rallies are sharp but short, and we're not convinced today's action in the market was anything to get excited about. In fact, it wouldn't surprise us if this move turns out to be just about over here.

1150 is our short term target for the S&P 500, where we plan to lighten up on our short positions, which should be followed by a larger sideways churn area. There is a slight possibility of a big drop from the 1150 area. The VXO and VIX fear indicators sank much today, and the Bulls in the AAII survey were only at 27% last week, while short interest in the NYSE was at record levels, much of it in the financials and homebuilding groups. SEC Chairman Chris Cox was on TV again talking about naked short selling, and the new enforcement policy, which may have had some effect. He explained that the rules will be enforced immediately in FNM and FRE, plus several major banks, but the SEC will not be concerned with past instances in which short-selling without borrowing shares occured. We're pleased that the SEC laid out a broader plan to later include all stocks. Short selling provides added liquidity and is not something evil. Naked short selling is illegal. Cox also said the SEC now has the tools to ferret out those spreading false rumors in order to benefit their positions, and they will use them. We applaud these long overdue changes.

Chief Trading Strategist Kevin Wilde returns from vacation next week.

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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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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

Nothing but a Bear Market Rally

Trader Talk
The major stock indexes traded back and forth the unchanged level today, before a late-day rally surge pushed the indexes solidly into the green by the close. Volume was heavier than yesterday.

Officially, the NASDAQ advanced 2.3% on 2.5 billion shares, while the Dow Industrials rose 1.4% on NYSE volume of 6.1 billion shares. The leadership profile remains very negative, with 52 stocks making new highs versus 806 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 trading action today changes nothing with the overall technical set-up, which remains solidly bearish. We plan to add to our short positions on any continuation of the rally, though bear market counter-trend moves usually come to a quick end. The 20 day MA for the stock indexes is our expected entry point for new shorts.
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Kevin Wilde, Chief Trading Strategist AlphaKing.com.

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