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

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.

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

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.

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