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.

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

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

No Tradable Bottom Yet

Trader Talk

The major stock indexes traded back and forth the unchanged level today, with the NASDAQ advancing 1.0% on 2.6 billion shares, while the Dow Industrials rose 0.7% on NYSE volume of 5.2 billion shares. The leadership profile remains very negative, with 55 stocks making new highs versus 801 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 every sell-off running in five waves and every bounce in three, all absent any sign of a capitulation spike down and corresponding up-spike in fear for the VIX, which suggests no meaningful or tradable bottom has been reached yet. Speculation in commodities remains high, with investor sentiment remaining ridiculously bullish, and thus that trend is destined for a hard fall somewhere around here. We do expect a summer rally of sorts for the stock market - once a capitulation low is reached - though an outright crash is not out of the question. What walks and talks like a duck is best called a duck until proven otherwise.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

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