Is this the "Night of the Living Dead" stock market?

Tomorrow is Halloween in the United States, when ghosts and goblins and "things that go bump in the night" come out in full force.

The stock market is playing along, with its zombie-like "Night of the Living Dead" rise from the graveyard over the past few days. The Dow is actually holding its recent big one-day gain, as opposed to the last one earlier this month, when a history-making point rise was simply handed back the next few days.

Also - for the first time in quite awhile - the DJIA is holding above its 10-day Exponential Moving Average. If the 10ema can now act as Support rather than Resistance, I would say the character of the market has definitely changed.

So, while the market has been beyond "spooky" all the month of October, you may be in for some "Thanksgiving" very soon if you catch one or more of these huge gainers bouncing off their "deathbeds".

Take my RSVP Play this evening for example.

Even though the stock was up over 80% today, it's just so beaten-down it can pop 500% and simply be back where it was just in September. That's how "deathly" oversold some of these stocks are right now.

The market is value player's paradise, but may not stay that way for too long, once the trillions of dollars pulled out of the market start to pile back in.

Well, the market got what it wanted, I guess...

To absolutely no one's surprise, the Fed cut the Fed funds interest rate by a half point today, bringing it down to 1%. The last time that happened, it kicked off the major bull market of 2004-2007.

I'm ready for an instant replay, aren't you?

Personally, I strongly believe stocks will never be this cheap again in our lifetime.

I don't have time here to go into the mountain of statistics to back up that statement, but suffice it to say, I think we are VERY CLOSE - if not right at - the chance of a lifetime to load up on cheap U.S. stocks.

Stocks are already starting to explode off mercilessly beaten-down lows. I'm about to name a stock below (for my paid Members only) that was up 80% today on HUMONGOUS volume - a stock trading at $148 this time last year...

That now can be bought for less than 9 bucks.

Will it ever see $148 again? I can't predict the future, but I would vouchsafe the downside risk on this one is slim to none vs. the possible reward.

Was one of your favorite stocks up 102% today? Mine was...

I know I've probably said this a thousand times lately about the current crazy historic market we're in, but I have to say it again...

What a difference a day makes.

After a last-minute market meltdown on Monday, we had just the opposite situation on Tuesday, with the market simply going straight up starting around 1:30 EDT. The Dow ended the day up an exciting 889 points, or almost 11% (again, making history of sorts) and the Nasdaq was up over 143 points.

Most of the market pundits attributed the rise on Tuesday to the anticipation of a nice interest rate cut coming in the next few days from the Fed. I think that's a given - the only question is how much of a cut Gentle Ben will allow. I expect it to be sizeable - possibly a full point.

With the market up huge, it's going to be tough tonight to choose the "best" candidate for huge gains on Wednesday. I have 37 on my list that just might do as well as my pick for the day - a stock that my paid Members saw go up a tidy 102% on Tuesday.

But I think I have a great candidate - it's a stock that's absolutely been beaten bloody lately, and is just being given away - the P/E ratio of the stock is a measly 2.2. The stock traded over $58 in May. You can pick it up now for 6 bucks and change.

I'll name that stock for my paying Members only.

This market is similar to watching a basketball game... there's no real reason to watch it until the last few minutes of "play"...

Unless you're a die-hard day trader, it simply does no good to watch the market movements during the day.

Today's market action provided one of the best examples I've ever seen. The markets tumbled on the open, then went back up, then down, then up, then down, then UP BIG, then DOWN BIG... and then just fell off a cliff in the last few minutes of trading, cratering to the lows of the day.

So, unless you're just an adrenalin junkie, watching this market all day would have been pretty nerve-wracking, and - at the end of the day - utterly disappointing for the bulls.

So much for a market bottom today. No Hammers on the charts, and - in fact - today's action took out the tails of the recent Hammers on the Dow chart. I'm now watching the "ultimate" low of the 10/10/08 Hammer tail now. If that's taken out, who knows where the market bottom will be.

However, even in this horrendous market environment over all, there are big gains to be made.

Take my RSVP Play this evening. The stock was up over 51% for the day on the biggest volume in months. Trading at $70 late last year, it's now at 9 bucks and change. Plus it's yielding over 11%, which will provide some nice income while waiting for the stock price itself to (continue to) recover.

Either the market is about to form a picture perfect "W" double bottom, or we're screwed...

There is no stock selection this evening. The Dow took out recent strong support at 8500 on Friday, which is extremely negative. What I'm looking for now is a possible picture perfect "W" double bottom. If we don't get that, then it's "look out below."

In a more "normal" market, I might play EFII. It's showing nice bottoming action. Other good charts are listed (including a stock that was up 100% in 7 days recently - even in this horrendous market) for paying Members only.

Let's wait and watch for now.

This market is trying to "Hammer" out a bottom...

I would not advise you to watch the movements of the market all day long.

You would get a serious case of vertigo.

Take the Dow. Please. (Sorry).

After gaining almost 200 points shortly after the open, it promptly lost all that and much more. But at the end of the day, it was back up to 8,691 and change, for a gain of over 172 points for the day. The Nas did not fare as well. It was down almost 12 points.

Checking out the Dow's chart, you can easily see a ton of support in the 8,500 area. You can also see three major Hammer candlestick signals in recent trading. As for now, that's still telling me this market is trying to "Hammer" out a bottom.

But if the Dow violates that 8,500 area by closing below it, then all bets are off.

However, possible good news is near at hand.

An interest rate cut of some degree is almost a given at the Fed's meeting at the end of the month. Depending on the size of that cut, that SHOULD help the market bounce a little.

Also, we'll soon know who our next president will be (hopefully - remember the 2000 election?) and... no matter who it turns out to be... that event will remove lots of uncertainty, which the market abhors.

So the next few weeks could be VERY INTERESTING!

Not much to add this evening...

Due to time obligations on other important projects this evening, I'll keep this update short and sweet (and I had a longer one than normal yesterday).

I still think we're bouncing off a major bottom (perhaps THE Bottom of the market for the rest of most of our lives. Obviously, we will not simply bounce off the bottom and head straight up from there (although some of the more oversold stocks with great fundamentals are doing exactly that).

I've found a GREAT looking (and rare) Baffle Play this evening. It popped over 29% today, and could be about to go on a big time run.

I'm about to name this low-priced stock (paying Members only).

More "uppage" in the market today - the tone has definitely shifted for the better...

With the DJIA up again over 400 points, and the Nas up over 58, the tone of the market has shifted for the better. And both indexes reclaimed (and were not repelled by this time) their respective 10emas (10-day exponential moving averages). That's a bullish sign!

Also, great charts are now "starting to work" again. By this I mean big breakouts are being allowed to continue on high volume, rather than cratering the next day on the same amount of big volume as profits were immediately taken. That's also bullish.

Finally, another positive factor is that on most of these recent huge updrafts in the market, buying has INCREASED later in the day. That's a sign of those "in the know" doing massive buying, and again... very bullish.

I have a STRONG feeling that, in the future - we'll be looking back on this time in the market -- right now -- and saying to ourselves "Why didn't I back up the truck and buy stocks when they were so cheap?"

But like any other financial crisis in history, that's easier said than done. Especially when everybody else is losing their heads all around you and dumping stocks willy-nilly.

But again -- like any other financial crisis in history -- that's almost always EXACTLY THE TIME you should be loading up on stocks.

But you don't have to take my word for it.

Warren Buffett recently claimed it was time to buy U.S. stocks again.

He added...

"A simple rule dictates my buying. Be fearful when others are greedy, and be greedy when others are fearful."

I'm feeling "greedy" right now...

I found a sweetheart of an RSVP Play this evening. It popped over 20% today, yields almost 10%, and has a single-digit P/E ratio.

I think even the "Oracle of Omaha" might be taking a look at this one.

I'm about to name this low-priced baby (paying Members only).

Some good news is starting to ease back into the market...

With all the "gloom and doom" coming from all forms of media these days, any kind of good news is like a breath of fresh air.

Well, we got some this week.

For starters, none other than the world's greatest investor - Warren Buffett - stated in an op-ed piece in the New York Times that "it's time to buy U.S. stocks."

I stated recently I felt that today's market is a "value investor's dream." It's so nice to see Warren agrees with me.

Some other good news concerned credit rates starting to thaw.

The benchmark 3-month dollar LIBOR rate further eased 8 basis points, to 4.42%. And there are rumors floating around the market that the LIBOR may fall dramatically this coming week. That alone could cause another day or two of "market melt-up" in the next few days.

We almost saw that happen Friday. Both the Dow and the Nas - after plunging on the open - reversed on a dime and started to head skyward. The DJIA hit an intraday high of 9,281 and the Nas topped out at 1,783.

But around 1:30 PM ET, it was all downhill from there for both indexes. Both ended in the red, with the Dow down 127 and change, and the Nas down 6.42. With the current turmoil going on in the markets, it seemed that nervous traders declined to hold positions over the weekend.

Closed End Funds traded on the major exchanges have been skyrocketing lately, with some up 50% and more just in the past few days.

I found a dandy of an RSVP Play in that sector that seems vastly oversold. It's a distressed security that invests - oddly enough - in other distressed securities! It popped over 30% Friday, and appears to have formed a solid double bottom.

The stock also yields a tidy 29.7%. I'm about to name this low-priced issue for my paying Members only.

The market has taken on a different tone, and it may be time to back up the truck once again...

Well, we can all stop holding our collective breaths now.

With yesterday's heartbreaking plunge, it seemed the bears were going to maul the market again, big time.

And for awhile, things looked bleak. Both the DJIA and the Nas, after solid openings, quickly resumed their downward treks, with triple-digit losses again (as we've grown so accustomed to) in the Dow.

But around 11:00 AM ET, both indexes turned on a dime and headed northward, causing the index charts to show nice Hammers. And towards the end of the day, big rallies occurred in both indexes.

Whew!

So now we have a quick retest of the recent lows, and a second Hammer in both of these indexes. And the second Hammer is higher than the first, meaning we are now possibly in a new uptrend.

It's actually the time of the year for that to happen.

Markets tend to bottom on or around October 15. So far, the market is right on schedule for this year.

Truth be told, there have already been HUGE short-term gains off the market bottom in just the past five days. I'm going to name a stock below as an ARM Play which is in that category.

It's in a sector you might never guess would have such gigantic moves - but in the last uptrend prior to the market meltdown, some of these stocks rocketed 200-300% and more just in a few weeks.

The stock I'm about to name below (paying Members only) may be about to do that.

Well, it was back to market carnage today...

The market giveth, and the market taketh away.

After the historic one-day point gain from Monday, the Dow gave most of it back today with a breath-taking 733-point drop.

The reason?

Gloomy comments from just about everywhere. The Fed chiefs, Sam Stovall, senior investment strategist at Standard & Poor's, etc. They've started using the "R" word, as in "recession" - and the fact the whole world was either already in one or about to fall into one.

The late and great legendary investor and philanthropist Sir John Templeton used to say "The time to buy is at the point of maximum pessimism."

If we're not there yet, I hate to see what else is in store for us.

I didn't really think the market would simply shoot straight up after Monday's historic romp. I'm reasonably sure we're at or near a bottom though, based on the most pessimism seen since Black Monday of October 1987.

Obviously, great charts are few and far between this evening. But I did manage to find a nice little stock with a great candlestick pattern setup. And the stock yields 8.66% while waiting for it to continue its recovery.

I'll name that stock as my RSVP Play (paying Members only).

As expected, the market pulled back today...

After a record-setting day, it was probably too much to ask for another huge up day in the stock market today. I expected the market to pull back, and it did.

The DJIA fared better than the tech-laden Nasdaq, which fell fairly hard due to news of tech companies cutting back on expenditures next year. The Nas fell 65.24 points, or a solid 3.54%. The Dow gyrated all over the place, but at the end of the day was only down 76.62 points, or 0.82%.

That's a lot better than the recent 500 - 700 point mammoth drops.

As the market recovers, I'm starting to look for FARM Plays.

That used to be another service I offered here at Trade Your Way To Wealth. FARM stands for "Fallen Angels Recovering Momentum." Maybe I should resurrect that service, since it's perfect for the type of stock market we're in right now - a greatly injured market that's trying to recover.

And "heaven" knows, there are TONS of Fallen Angels out there.

For example, TSYS falls under the FARM Play category. The stock is bouncing off an extremely strong Morning Star reversal pattern on great volume, and shows two gaps up in the last two days of trading. Lots of buying is coming back into this Fallen Angel. DXPE might be another one. And LPHI, QSII, THOR, EBS and others come to mind.

I'll also be looking for strong candlestick reversal patterns as we come off this bottom. I've found a beauty of a Morning Star this evening on a stock that's just about been given up for dead. It bounced over 12% today, forming the pattern.

I'll name that stock as my RSVP Play (paying Members only).

Well, I was pretty close on my one-day Dow Jones move...

Recently I predicted we could possibly see a 1,000-point one-day move on the upside for the Dow Jones Industrial Average.

That prediction came very close to actuality today. I missed it by 64 points.

That's right, the DJIA Index powered up 936 points today, the biggest one-day point gain in history for this index. The Nasdaq almost did as well, with a 195 point gain, the SECOND largest in history for the Nas. These gains equated to over 11% pops for both indexes.

Not too shabby.

So we are looking at history being made here, folks.

After the worst one-week performance of the DJIA in its 112-year history, it immediately about-faced and turned in the best one-day gain ever.

We live in interesting times.

Truth be told, when the market is about as oversold as when we started the Great Depression, it's not too hard to predict humongous gains like I did. Odds are very good of some sort of catalyst to cause that kind of short-term gain.

And again, we had to bounce big time sooner or later, to avoid going to zero!

Hundreds of stocks were up at least 30% today, so finding the BEST charts out of scads of possibilities proved to be no easy task this evening. You could just about throw a dart at a list of stocks today and hit a huge mover.

But I found a stock that's about as oversold as you can get. This former high-flyer recently crashed from its high in July around $31 down to its Friday close of $4 and change. And no, it's not even a financial or real estate related stock. I think it's about to come back big time. It was up over 67% today, and it probably has tons more on the upside.

I'll name that stock as my RSVP Play (paying Members only).

Get ready for a big market bounce, and maybe THE bottom (finally!) of this painful pullback...

This market HAS to bottom out sooner or later, or - as I said in my last post - the venerable Dow Jones Industrial Average will be zero in 16 days dropping 500 points a day as it has lately.

And we may have seen the bottom on Friday. It sure looks like a capitulation sell and reversal day to me. While we may bounce around a bit here as the market finds the true bottom and stabilizes, I think we are FINALLY near the end of this recent carnage.

The DJIA's chart was all over the place Friday, with the index up 300 points at one time during the day. Its daily range spanned 1,000 points! But at the end of the day, the Dow just wasn't able to hold those gains, and ended - once again - in the red, to the tune of 128 points. The Nas bucked the trend this time, ending in the green with 4 points and change.

The Dow's chart shows a Hammer-like Doji on humongous volume, thus my rationale for the capitulation and reversal day theory. The Nas chart shows a Spinning Top / Piercing Pattern, also on huge volume.

Tons of money will be made very quickly on any kind of bounce here, in my opinion. Lots of money was made on the LONG side Friday, as over 225 stocks bounced 20% or more (yes, I said the LONG side)! That's the most I've seen in recent memory. And I think more of that kind of action is on the way.

For example, take a look at my RSVP Play for Monday (paying Members only). This stock was up almost 49% Friday, and could be about to make a much larger move.

So get your "buying truck" ready. It may be almost time to "back it up" again.

I give up... this market is insane!

At the current rate of descent, the Dow Jones Industrial Average will be zero in less than a month. I don't see anything worth buying at this time.

The ProShares UltraShort ETFs are going into super climax runs for the most part. So the risk is huge of buying those if the market turns around. Sooner or later things will "revert to the mean", but I have no clue when.

Let's just stay in cash until (hopefully) this market soon finds a bottom.

My gut feel is that someone with lots of cash, time and patience could stand to make a bloody fortune by doing heavy buying as this mega-mess gets straightened out.

For the first time in weeks, I'm actually seeing lots of potential buy signals...

You couldn't really tell it from the general markets by the way they closed, but I'm feeling pretty good about how things went overall today.

You see, for the first time in quite a while, I'm seeing lots of great buy signals in scores of individual stocks this evening.

I'm seeing tons of high-volume Bullish Engulfing patterns, Piercing Patterns, Thrusting Patterns, Bullish Haramis, etc. Buyers are definitely coming back into this market, nibbling the tons of stocks now on the bargain table.

And that's a big departure from the way things have been going recently. Up until this evening, I couldn't find a single chart I liked over the past few days or so, outside of the ProShares UltraShort ETFs perhaps.

Speaking of those ETF charts, lots of them are showing extremely overbought conditions, with gap up Hanging Man setups. Surely we are at or near the bottom of this bear market.

History is on our side there. We are just three weeks away from the beginning of the best time period to be in the market. The November through May time slot has seen enormous moves in the stock market historically... and we are in some of the most oversold conditions I've ever seen!

In fact, I liken the current market to a basketball being held underwater. The deeper it goes, the higher the resulting bounce will be when let go! I wouldn't be surprised to see 1,000 point one-day moves on the Dow very soon.

And the way the DJIA has been plummeting lately, it will be zero in 27 days. Unless you think we're "going to hell in a handbasket", I don't think that's going to happen.

Things may look bleak now.

But these types of drastic selloffs, market crashes, etc. all have lead to one thing historically...

A new bull market!

And I think the next one will be of historic proportions.

Well, so much for the bottom...

For a while, it all looked like things were right on schedule for a good day in the markets. Even a market bottom bounce.

After all the Shooting Stars showing in the ProShares UltraShort ETF charts on Monday, along with the enormous Hammers on the DJIA and Nas charts, I expected a huge up day in the market today. And the short-the-markets ETFs did open weakly.

Things looked rosy.

That lasted, oh... maybe five minutes.

And then, the carnage continued in the market.

The Dow nosedived over 500 points, losing an amazing 870 points in just the last two days. And the Nas followed suit, shedding triple digits - down 108.

Great charts are as rare as hen's teeth, except for the aforementioned ProShares UltraShort ETFs. Those seem to be the only game in town in this freefall.

Having said that, my last "lunch money" trade was up 45% intraday the very next day. So there is still money to be made on the long side, if you are extremely nimble.

Houston, we have a bottom!

Or so it seems.

After being down a jaw-dropping 800 points today, the Dow shored up to be down "only" 370, or 3.58%. The Nasdaq fared worse, down over 84 points, or 4.34%. And it was down over 140 points at one time today.

This sure looks like at least a short-term bottom to me. Hammer signals can be seen on charts everywhere, and the one on Nas' chart is a gap-down, "throw-in-the-towel", capitulation bottom if I've ever seen one.

Also, take a look at some of the ProShares UltraShort ETF charts. Beautiful, "textbook" Shooting Stars abound, indicating possible tops for these entities that go mega-short the market.

In this market, obviously anything can happen. But I would bet on a playable bottom here. Look for a huge bounce tomorrow for confirmation.

Sell on the news?

As expected, the U.S. House of Representatives voted to pass the $700 billion bailout package to prevent a total financial market meltdown.

No matter how you feel about the original 3-page plan becoming a 400-page, pork-laden travesty, most financial experts feel it had to be done. The market popped nicely at first on news of the bill's passing, but then waned badly by the close.

This week could be interesting, to say the least.

It's getting late, so I'll wrap up here. Good luck to all this week!

I survived Hurricane Ike!

Well, Hurricane Ike was a total nightmare for us here in Houston.

Now I know what it's like to live in a Third World country. Traffic lights not working, mile-long lines at the few gas stations that were open, no power for two weeks, and no cable for another five days.

The two most-heard phrases during this disaster:

"What a mess!" and...

"It could have been worse."

But now it's time to regroup and get things back to normal again.

It's good to be back!

The market meltdown during all this did not help at all!