No, Stocks Haven't Hit Bottom Yet!

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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 no high volume follow-through advances to confirm any of the big up days since the crash landed last month. The leadership profile also remains very bearish, with 10 stocks making new 52 week highs versus 503 stocks making new 52 week lows.

The 4% rule remains negative, while Federal Reserve policy remains positive. The VXO volatility indicator closed the week at 70.3, starting a new spike up in fear. The primary Elliott wave count suggests a wave 5 meltdown remains underway, with yesterday's pop a minor wave ii of an expected 5 wave move below the October 10 crashing lows.

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:

Look, there is going to be one helluva rally coming out of all this churn, but our technical works says we have to suffer one last clean-out crash before this monster rally lands. We have experienced many one-day-wonder false starts to this expected advance since this bear started, and the failure of these rally pops is testament to the internal technical weakness that suggests very strongly that the October 10 lows are not the technical lines in the sand from which a more lasting bull surge will emerge. Indeed, the on-going five wave mega plunges, followed by big - though lesser - three wave partial recoveries, suggest the bulls are fast running out of time before the next killer clean-out plunge lands. Focusing in on the move above the 20 day moving averages (gold line) in the charts below that landed a week of so ago, we can see the peak as a head of a head and shoulders top, with the recent move back (yesterday and today) to retest the 20 day MAs as part, or whole, of the right shoulder. That puts yesterday's low, and the October 10 lows, as the neckline where raw capitulation resides. We've seen this movie before, and it doesn't end well for the bulls who see yesterday's bounce as the end of their misery. What really happened yesterday was the stock market landed on the mortician's table only to croak a barely audible: "I'm not dead yet." Now the mortician is a tad deaf, and the starting the bone saw doesn't help, so our advice is you better be ready for some terror and horror to come as we get to see exactly what the bulls are made of...

Have a nice weekend.

Kevin Wilde, Chief Trading Strategist, AlphaKing.com

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

Stocks: Bottom NOT in Yet!

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 no high volume follow-through advances to confirm any of the big up days since the crash landed earlier this month. The leadership profile also remains bearish, with 18 stocks making new 52 week highs versus 205 stocks making new 52 week lows.

The 4% rule has turned positive, confirmed with bullish Federal Reserve policy. The VXO volatility indicator closed the week at 62, showing some modest pullback in fear. The primary Elliott wave count suggests a wave 5 of 3 meltdown run is slated to land anytime soon as wave 4 counter-trend advance stalls and reverses into what should see one more crash to major new lows for the stock indexes.

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:

The up/down violent trading action was in play once again this week, with this one ending nearer the top of the recent trading range. The technical set-up calls for the bulls to be handed yet another beating that their complacent: "The bottom is in!" mantra deserves. Bear markets are all about crashing moves followed by straight up advances as the bulls get tricked into believing the bull is back. While we don't claim perfection, we did lock in some profits on the big dip earlier in the week, while adding new short positions as the sucker rebound unfolded. We would have liked to lighten up more on the dip, but one thing about the current volatility is the big moves offering very little chance to get in or out of positions. Since the close on Friday was the fourth consecutive up day, we are very confident that next week should see a reversal of this week's gains. Yes, it's election week. Yes the European central bankers will cut interest rates. Yes, it's the start of a new month. Despite all that manipulative potential, our technical work says the best the bulls can hope for next week is some sideways churn, though our confidence level is super-high that the week will end in a victory for the bears no matter what happens earlier in the week. Not even the famous rebound off the 1987 crashing lows - a favorite of the buy-and-hold crowd - went higher from this position without falling in one last gasp five wave plunge. And that was only a correction within a secular bull market. This is something much more dire, and real. 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

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

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

3 Waves Up, 5 Waves Down

Trader Talk

The action today was the exact opposite of yesterday where a rally was followed by a sell-off, which was followed by a late-day surge, while today we saw a drop at the open, a rally intra-day, followed by a late-day plunge. Volume was on par with yesterday.

Officially, the NASDAQ fell 0.2% on 2.4 billion shares, while the Dow Industrials dropped 1.8% on NYSE volume of 5.4 billion shares. The leadership profile remains negative, with 103 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 looks like a five wave down move followed by three-waves up topping action. If so, it should be all downhill from here. The economic news showed weaker than expected GDP growth, and weaker than expected unemployment numbers.

The Big Kahuna of the latter lands prior to the open tomorrow, and could be the last straw that opens the selling flood-gates to confirm the super-bearish potential of the Elliott Wave set-up. As trend-followers with major skin in the game, we look forward to the next stock market buy signal, though so far there appears to be little in the way of hope for such bullish nirvana. When that changes we will gladly change our stance from bear to bull. Till then, watch out below....

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

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

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.

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

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.

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