Sunday, January 22, 2012

Big Wave Trading Portfolio Update

Big Wave Trading is currently 100% long in our margin and IRA accounts. The Big Wave Trading market model went into a full buy signal on 1/5/2012 following a partial buy signal on 1/3/2012. Since the full buy signal, multiple stocks have set up and broken out of sound consolidation patterns. The one problem with this rally, however, is that we are not seeing any explosive gains right off the bat. Normally at the start of new uptrends, Big Wave Trading will have a handful of stocks up 20% in just a few days to a couple of weeks. This is not happening this time. This is in part due to the slow speed of this rally as we are only moving slightly higher each day, outside of 1/18/2012. Nobody knows if this rally will continue or will end with a reversal. The only right play is to be completely prepared for both outcomes. If this rally comes under distribution, Big Wave Trading will begin cutting losses and pairing back long positions very fast. As of now, we continue to focus on the long side cutting losers quickly and quickly moving that money into new stocks giving new buy signals or current long positions offering up additional buy points. If the market comes under a few days of distribution in a short time frame the model will switch from BUY to NEUTRAL to a possible SELL depending on how much selling pressure shows up in the market and leading stocks. We will see how this new week shapes up. I expect a pullback. However, what I expect does not matter. It is what the market actually does that matters.

current top holdings – % return non-margin – date of signal

RAM – 20% – 1/9/2012

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