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.

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Stock Market Forecasting Bad Recession

AlphaKing.com
Daily Trend and Trade Review	July 1, 2008
Trader Talk The major stock indexes traded back and forth the unchanged level today, with the mildly positive close run on higher volume. Officially, the NASDAQ advanced 0.5% on 2.7 billion shares, while the Dow Industrials rose 0.3% on NYSE volume of 5.9 billion shares. The leadership profile remains very negative, with 77 stocks making new highs versus 1154 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 stock market fell to new lows today, seeing the S&P500 touch its March intraday bottom, before a late-day rally saved the day for the bulls. The reaction tomorrow is going to be very interesting. A hard rally from such support may open the door to a larger bounce, along the lines of the one to two week thing we mentioned yesterday. No follow-through from today's rebound, and the selling flood-gates should open for real as the March lows get taken out for the S&P500, as it did a week or so ago for the Dow Industrials. There are no signs that the bearish stance of our indicators is in danger of being proven wrong. As trend-followers, who would just love to fatten our 401Ks going forward from any major bottom here, being proven wrong this time around would be met with a nice smile. We believe the larger picture is of recession that has the potential to turn into a depression, thus a return to the financial world of complacent money-debt-spin-around as we used to know it would be just fine with us. The AK Trading Indicator was designed to make big money when-ever a big move landed, and folks we have a big move headed our way in a hurry. Up, would be fine with us, though it's more likely to be its evil money-destroying twin. Kevin Wilde, Chief Trading Strategist AlphaKing.com. For Free charts with trading signals and fundamentals ratings, visit AlphaKing