Saturday, June 30, 2012

Big Wave Trading Portfolio Update And Top Current Holdings

It was an exciting end to what was a boring week. The weak SELL signal that our portfolio was under switched to a NEUTRAL signal on Friday morning with the Nasdaq gapping above the 50 day moving average. This automatically put us at NEUTRAL as the 50 day moving average was the fail safe area. In the final 30 minutes of trading the stock market indexes began to take off again on strong volume. This then switched our model into a BUY signal. This signal is not being confirmed by volume in the Nasdaq, Russell 2000, leveraged and non-leveraged ETFs. This means that we will continue to trade small but we can increase our long positions in our portfolios due to recent longs all working out the past few days. Since the BUY signal was triggered at the EOM, we can not say that this is a true strong signal. There simply are too many non-confirmations. The model will need to see further confirmation via price and volume in the indexes and ETFs if it is to get anywhere near 50-100% invested. The best aspect of the BUY signal comes from leading stocks with strong fundamentals and technicals. Even though these breakouts/moves are not even close to being perfect, we must recognize in this strange QE/Operation Twist environment volume has become irrelevant for the first time in history. There is no other point in time going back to 1880 on the DJIA, 1957 on the SP 500, and 1971 on the Nasdaq where you will see the market rally for any period of time on below average monthly volume. If you pullup a monthly chart plotted with a 50 monthly volume average you can see that there has never been a time where the averages have rallied on below average volume. The shocking thing about this is that this has been going on since the end of 2008 on the SP 500 and since the end of QE1 in 2010 on the Nasdaq. So this is unprecedented trading and the lack of volume will continue to keep us off of margin until the 50 day weekly and monthly volume average sees some kind of decent accumulation. Market manipulated money printing rallies are simply not going to produce the old 100%-500% gains in 6-12 months like we got used to in leading momentum stocks from 1982-2008. Only a major market reset where prices can find a real bottom is going to unleash another round of accumulation buying. The current BUY signal will switch to NEUTRAL if the market closes below Friday’s LOD. There are some nice bases out there that are still forming in strong CANSLIM quality names. If these continue to breakout, we will continue to increase our long exposure per each position. In this tape, no trend is safe, so we must move very carefully. Going all in 200% margin right here is simply foolish as volume does not confirm this is going to be a powerful move across the board. If that volume comes in during the next couple of weeks, wonderful. If it doesn’t, will you really be surprised? I know I will not. Have a wonderful weekend and aloooooha! Top Current Holdings – Percent Gain – Date of Signal AVD – 84% – 1/10/12 BVSN short – 74% – 3/19/12 VRNM short – 38% – 4/10/12 PHMD short – 33% – 5/11/12 MAGS short – 28% – 4/18/12 WZE short – 27% – 4/10/12 ANGI – 26% – 5/31/12 SNTA – 25% – 6/26/12

No comments: