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

Ugly After-Hours Session for the QQQQ

The major stock indexes zig-zagged higher today, the NASDAQ gaining 1.2% on 2.6
billion shares as the Dow Industrials rose 1.85% on 7.3 billion. The Leadership
profile is bearish, but the new lows list has contracted dramatically in this 3-day
rally, today posting 89 new highs and 271 new lows.

The short term momentum oscillators have turned positive, contradicting the bearish
stance of the AlphaKing Trading Indicator. We have no new trades at this time.

It sure looks like the SEC has put the fear of God into the naked short-sellers
who had really piled into financial and homebuilding stocks to record highs. Monday
July 21 is judgment day, the start of the new enforcement of an old rule. Traders
do not want to worry about scrambling to find shares to borrow by the settlement
dates. The stock indexes continue to map out in near-perfect bear market pattern,
and with many big earnings releases after the close today - GOOG, MSFT, IBM - and
the reactions to them after hours, the Nasdaq 100 etf fell hard to below its
lowest trade of the regular session. Things don't look rosy for the bulls here,
and we eagerly anticipate Monday's trade in the dreary homebuilding and financial
stocks.

Chief Trading Strategist Kevin Wilde returns from vacation next week.
For Free charts with trading signals and fundamentals ratings, visit AlphaKing

Stock Market Selloff Continues, No Relief in Sight

Trader Talk

The major stock indexes traded lower today, with the NASDAQ dipping 1.2% on 2.1 billion shares, and the Dow Industrials slipping 0.4% on NYSE volume of 5.4 billion shares. The leadership profile continues very negative with only 77 stocks making new 52-week highs, and 1053 posting new lows.

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

Futures were up strong early this morning on news that the Fed will support Freddie Mac and Fannie Mae, which hold 50% of all U. S. mortgages, but the higher open quickly faded, as the reality of the dour situation in financial stocks set in. Big takeover news no longer buoys the market. The market is very oversold, but investors understand that it can stay oversold for a long time. We see no reason to cover our short positions now, and we'll add to them on a decent rally that meets our upside counter- trend rally targets. We may cover our shorts on a big selloff from these levels, depending on our market indicators.

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

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