Only One Accumulation Day, Need Two

Trader Talk

The major stock indexes traded back and forth the unchanged level once again today, with modest gains going into the close run on higher volume. Officially, the NASDAQ advanced 1% on 2.8% billion shares, while the Dow Industrials rose 0.3% on NYSE volume of 6.5 billion. The leadership profile remains negative, with 133 stocks making new highs versus 187 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, and today's action changes nothing in that regards. Both the S&P500 and Dow Industrials smashed below their March lows a few weeks ago - in five waves - and have now rallied back to that former support level in three waves, which suggests that current levels should provide formidable resistance to any attempts at continuing the advance, and thus lower prices lay ahead. We are trend followers who follow the big picture based on historical cycles and signals from major technical indicators, and all of that continues to suggest our bearish view is correct no matter the amount of intra-day, daily, weekly, or monthly volatility.

We experienced one 2%+ mega volume accumulation day advance late last week, and the bulls are dead in the water so long as such rally days land in singular form, rather than the double follow-through variety that signals a change in trend is in progress. Breakdown followed by pullbacks is the normal fare of bear markets, and the current technical set-up suggests that is what we have been experiencing over the past week or so.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.
How to Profit in Bull & Bear Markets
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Next Move Down for Stock Market

Trader Talk

The major stock indexes traded back and forth the unchanged level today, with modest gains going into the close run on higher volume. The leadership profile remains negative, with 104 stocks making new highs versus 219 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, and today's action changes nothing in that regards. Indeed, the push into the green going into the close today looks like the finishing touches being added to close the counter-trend rally that began late last week. It should be all downhill from here.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

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Ending Soon: Stock Market Bear Market Rally

Trader Talk

Sellers jumped on board positive early action today, with the modest red ink going into the close for the major stock indexes run on lower volume than we experienced on Friday. The leadership profile remains negative, with 70 stocks making new highs versus 198 stocks making new lows.

The short term momentum oscillators have turned negative once again, confirming the bearish stance of the AlphaKing Trading Indicator. We have new trades below to add to our short exposure ahead of an expected move to new lows.

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. The rally last week has offered a great opportunity to add to short positions, and that is exactly what we are doing at this juncture.

The action today that matters landed after hours, with American Express and Apple both falling hard post earnings releases, on the backs of news that signals a struggling consumer resulted in both lower retails sales and deteriorating credit quality. In short: consumers can't pay their bills, thus they can't be expected to buy retail luxuries such as I-Phones and Plasma TVs. The technical set-up argues very strongly for a smash below last week's lows for the stock indexes, and a bona-fide crash may very well develop from that position. Time to batten down the hatches...

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

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Caution! Plunge Protection Team at Work

The short term momentum oscillators are positive, in contrast with the bearish stance of the AlphaKing Trading indicator. The accumulation/distribution profile remains negative, confirmed with a bearish leadership profile, with Friday's close yielding 86 stocks making new 52 week highs versus 246 stocks making new 52 week lows.

The 4% rule remains negative, while Federal Reserve policy remains bullish. The VXO volatility indicator closed the week at 25.5, showing some deceleration in fear, though well shy of anything that would signal the sell-off has suffered a capitulation needed to signal a turn positive. The primary Elliott wave count continues to suggest a wave 3 melt-down run is underway, with the current wave count wave (i) of Wave 3, though an out-right crash at this point is not out of the question.

Traditional seasonal trends have us looking for a difficult third quarter for the bulls after a modest summer rally attempt stalls, 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.

It was a wild week in the stock market, with total volume just a bit higher than last week, and one accumulation day. We don't have the statistics yet, but it sure looked like some major short-covering was going on, as the Plunge Protection Team, with all the heavy hitters out trying to forestall a crash, and finally words from the SEC that they're going to crack down on naked short-selling. While we applaud the new enforcement promises, there is no credible evidence that it will keep stocks from falling. We expect the S & P 500 Index to break below 1200, with 1150 our target, to be followed by a larger, sideways churn area.

Chief Trading Strategist Kevin Wilde returns from vacation next week.

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

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