Thursday, February 28, 2013
Despite a disappointing GDP reading of .1% the market was able to climb near their respective highs. The Dow Jones Industrial average came within 16 points of an all-time high before experiencing a late day sell off. End of the month rebalancing shot volume up by the close, but the damage done by sellers at the end of the day spoke volumes. This week has been something else with extreme realized volatility. The VIX index jumped as the markets sold off in the final hour rebounding after retracing much of Monday’s move. A wild and crazy week for the markets and tomorrow’s economic data should add to the fireworks. We remain stuck in neutral mode and after today’s action it is a good place to be. Sentiment figures came out today showing bullish pulled back slightly from the II survey, but significantly from AAII. AAII bulls dropped below 30% as bears jumped to 36%. Readings from sentiment survey certainly show bulls were shaken from the moves over the last 5 days of trading. Does it signal a bottom or top? More than likely it does not, but just shows you how fast sentiment will change with a small movement from the market. Leading stocks remain mixed as a few continue to move higher, but not in high flying fashion. The past week of trading really has screwed with charts. Volatility is something we embrace and love. High volatility leads to great big gains for our trading patterns. Unfortunately, the past few days were so large it has damaged quite a few stocks. While the Dow was able to recapture Monday’s highs the other major indexes were unable to do so. Now you toss today’s action into the mix it really calls into question whether or not any move is going to be sustainable. It appears more chop is headed our way. Stay disciplined and check your emotions at the door. Short-term trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY DOWNTREND CHANGE 2/28/2013 151.61 -0.20% IWM DOWNTREND CHANGE 2/28/2013 90.48 0.19% QQQ DOWNTREND NO CHANGE 2/28/2013 67.10 -0.21% USO DOWNTREND NO CHANGE 2/25/2013 33.21 -1.16% UNG DOWNTREND NO CHANGE 2/28/2013 19.18 1.91% GLD DOWNTREND NO CHANGE 2/28/2013 153.00 -1.02% SLV DOWNTREND NO CHANGE 2/28/2013 27.54 -1.68% DBC DOWNTREND NO CHANGE 2/28/2013 27.13 -0.44% FXY UPTREND NO CHANGE 2/28/2013 105.76 -0.55% FXE DOWNTREND NO CHANGE 2/28/2013 129.49 -0.64% TLT UPTREND NO CHANGE 2/28/2013 118.29 0.19%
Tuesday, February 26, 2013
Positive economic data fails to lift stocks initially as the market focuses on Bernanke’s testimony. Europe continued to succumb to the Italian problem. Volatility dropped after jumping 34% yesterday, but despite the market rebounding volume did not follow. Monday’s have been low volume sessions for much of this year with Tuesday’s showing big volume. Today’s lack of volume shows institutions weren’t too keen on jumping back in the market. Late day buying helped push the market to the highs of the session. We remain in neutral mode and we do have a change in a short-term trend with one of our ETFs. The market now will have to digest more economic news with Durable Goods and GDP coming Wednesday and Thursday. Friday we’ll likely see the US go over the Sequester hurdle. We’ll be focused on the overall market action. At the moment we are seeing a lot of distribution in the market without much accumulation. Looking back to September of last year we didn’t see this level of distribution like we are seeing now. Perhaps there is something more sinister happening, but we’ll wait for our signals before we act. We are still a bit oversold in the near-term so another bounce from the market is not out of the question. Stay ready and execute your game plan. We do have few pockets of strength, but it is so few and far between it is nothing to get excited about. FLT continues to be a big winner, but many leading stocks look bad. BAC has been a leading stock despite its pitiful earnings growth. Remember, BAC has been goosing its earnings using its loan loss reserves. GS remains above its 50 day, but the last few selling days have left a big blemish. Homebuilders certainly got some love today, but remain below a key moving average. These stocks will need to rebound to give this market any chance of rebounding. Stick to your signals and ignore the nonsense spewing from CNBC. Short-term trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/26/2013 150.02 0.68% IWM UPTREND NO CHANGE 2/26/2013 89.37 0.39% QQQ DOWNTREND CHANGE 2/26/2013 66.56 0.38% USO DOWNTREND NO CHANGE 2/26/2013 33.33 0.36% UNG DOWNTREND NO CHANGE 2/26/2013 18.98 -0.52% GLD DOWNTREND NO CHANGE 2/26/2013 156.22 1.22% SLV DOWNTREND NO CHANGE 2/26/2013 28.41 1.21% DBC DOWNTREND NO CHANGE 2/26/2013 27.42 -0.18% FXY UPTREND CHANGE 2/26/2013 106.55 -0.75% FXE DOWNTREND NO CHANGE 2/26/2013 129.57 0.02% TLT UPTREND NO CHANGE 2/26/2013 119.33 -0.58%
Monday, February 25, 2013
Today’s start to the day appeared as if the market as about to resume its bullish trend. Economic data was non-existent besides a disappointing Flash PMI out of China. Europe was rallying hard on hopes of an optimal Italian election outcome. By mid-morning it became clear the Italian elections were going to be less than optimal. Sellers just didn’t stop as Europe close, but continued through the end of the session. Volatility soared more than 30% as this uptrend has come to an end. Big Wave Trading’s model has moved to neutral after 3 big distribution days in four days. Today is not what you want to see from the market when you are bullish. We may get a bounce, but this market will need some time to repair itself if we are to get another uptrend. We are in neutral mode as this uptrend has ended. Today’s McClellan Oscillator hit -206.85 an extreme oversold reading. What is funny at the highs of the session the oscillator was neutral. We aren’t that far from the highs and to be in extreme oversold conditions is slightly surprising. It would not surprise us if this market finds some footing and reclaims some of today’s losses. Anything is possible, but after the past 4 days of market action it is clear the trend has changed. It will take quite a bit to turn this ship around. Regardless of what we’ll encounter we’ll be ready. There is quite a bit of economic data that is about to hit the market. Tomorrow we’ll see a lot of home related items, consumer sentiment, and the Richmond Fed. Thursday we’ll get another read on fourth quarter GDP. Last reading we saw a negative reading and expectations are for revisions to put fourth quarter GDP at .5%. While .5% is better than negative growth the mere fact we are only able to grow at .5% is simply unacceptable. Perhaps we need to revisit our economy and the role government has in it. Government has been running trillion dollar deficits since 2009 and we get .5%? It is quite pathetic. It is time to demand better. A bounce would not be unexpected here as we are a tad oversold. However, it is clear from the past four trading sessions this market is on edge. Short-Term Trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/25/2013 149.00 -1.90% IWM UPTREND NO CHANGE 2/25/2013 89.02 -2.21% QQQ UPTREND NO CHANGE 2/25/2013 66.31 -1.24% USO DOWNTREND NO CHANGE 2/25/2013 33.21 -1.16% UNG DOWNTREND NO CHANGE 2/25/2013 19.08 3.92% GLD DOWNTREND NO CHANGE 2/25/2013 154.34 0.90% SLV DOWNTREND NO CHANGE 2/25/2013 28.07 0.86% DBC DOWNTREND NO CHANGE 2/25/2013 27.47 -0.47% FXY DOWNTREND NO CHANGE 2/25/2013 107.35 2.32% FXE DOWNTREND NO CHANGE 2/25/2013 129.55 -0.96% TLT UPTREND CHANGE 2/25/2013 117.03 1.97%
Sunday, February 24, 2013
The Big Wave Trading Portfolio Model remains under a BUY signal from 1/2/13. There is added pressure arising on the overall model, thanks to the Wednesday and Thursday distribution days and the overall wedging pattern of the overall uptrend. This, along with the lack of gains above 1.5% on higher volume, following the 1/2/13 signal, keeps us in the cautious bull camp which is where we have basically been following the third week of January. Despite the problems in the overall uptrend, we remain in an uptrend and until we have a series of 5 to 6 clear distribution days over a 2 to 3 week period we find it foolish to fight the Fed and unlimited QE. Some of our current long positions gave heavier volume partial profit taking signals and a few recent new long positions triggered cut loss levels. But overall it was a fairly orderly pullback. So far, at least. On top of that, we had multiple buyable gap up signals that worked very well intraday. It was a 4 for 4 session with 3 big IPO winners. Even though volume was lower overall on Friday, we have learned that price is all that matters. If stocks still have more of an explosive volatile bias to the upside on an individual basis then we will have our models focus on that area of the market. What will change our minds? The same things that always do. Our new longs start failing immediately, our current holdings trigger profit taking signals, and/or the market begins a rapid decline in heavier volume. Right now, we are on watch for further heavy selling. However, calling tops here, as it always has been throughout human history, is a foolish and unwise proposition. I recommend ditching the opinions and using a sound back-tested time proven systematic methodology that completely eliminates emotions. Top Current Holdings – Percent Return – Date of Signal CAMP long – 92% – 4/26/12 CSU long – 79% – 9/4/12 HEES long – 62% – 9/4/12 FLT long – 52% – 9/6/12 EAC long – 44% – 12/17/12 ASTM short – 39% – 7/17/12 POWR long – 37% – 12/11/12 WAGE long – 31% – 1/8/13 AXLL long – 31% – 1/4/13 HIMX long – 26% – 12/19/12
Wednesday, February 20, 2013
Building permits and housing starts failed to inspire the market, but the selling didn’t start ramping until the FOMC meeting minutes. Volume for much of the day was running lower than Tuesday’s level as traders were waiting on the Federal Reserve’s latest meeting minutes. Upon the release it was clear from the release the Central Bank is at least talking about ending the or at least curbing the latest round of asset buying. The minutes also revealed the Fed is a bit more optimistic about the state of the economy and therefore could reduce the size of their purchases. Sellers didn’t need much more than that to take stocks below last week’s low in heavy trade. One day doesn’t make a trend, but today we finally saw some heavy volume selling. Our uptrend is on shaky ground and it is a prudent move to make sure you have your exit strategy in place. AAPL continues to weigh on the overall market, but today sellers took to the entire market. GOOG dropped back below $800. Crude oil fell more than two points with Gold and Silver falling hard on the day. One day doesn’t make a trend, but it is these types of days where you stand up and take notice. When indexes and leading stocks get hit hard you have to take notice and adjust. Know where your exits are and make sure you stick to your plan. It will be important for this market to find its footing to keep the uptrend alive. Selling in bunches like today are a big red flag for the market. Your stocks will let you know what is going on and if you are noticing your stocks are quickly hitting your exits it is a good sign the broader market is about to head lower. We are in caution mode and will need to see this market shake off today’s selling. Know your exits! Short-term Trends: No changes for today, but any further selling we are likely to see SPY, IWM, and QQQ flip to downtrends. TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/20/2013 151.34 -1.25% IWM UPTREND NO CHANGE 2/20/2013 90.83 -1.86% QQQ UPTREND NO CHANGE 2/20/2013 67.19 -1.54% USO DOWNTREND NO CHANGE 2/20/2013 34.17 -2.26% UNG DOWNTREND NO CHANGE 2/20/2013 18.32 0.11% GLD DOWNTREND NO CHANGE 2/20/2013 151.44 -2.50% SLV DOWNTREND NO CHANGE 2/20/2013 27.59 -2.99% DBC UPTREND NO CHANGE 2/20/2013 27.92 -1.13% FXY DOWNTREND NO CHANGE 2/20/2013 104.82 0.05% FXE DOWNTREND NO CHANGE 2/20/2013 131.68 -0.85% TLT DOWNTREND NO CHANGE 2/20/2013 115.92 0.30%
Tuesday, February 19, 2013
The market is able to shrug off a dip in homebuilder sentiment and move into new highs on the year. Small caps continue to lift despite ultra light volume in the IWM tracking ETF. Volume on the day was below Friday’s option inflated volume. NYSE composite came in second adding 73 basis points boosted by Oil and Gas sector followed by Utilities. High gas prices and higher payroll taxes appear, for now have yet to cause any impacts to consumer spending despite WMT internal memo leaked on Friday. Our uptrend remains and we are going to continue to stick to it until we see evidence to suggest we are going switch gears. Volatility continues to be compressed as this market continues to push to the upside. Fears of any shock in the market have subsided as we have yet to see any major hurdles arise. We have our exit strategy in place so we do not fear any move to the downside. However, it is interesting to see how much volatility has compressed since this market has pushed higher. There isn’t any fear out there. Whether that translates to further upside or not remains to be seen. We have our uptrend and are operating as such. Until we see distribution piling up and leading stocks breaking down then we’ll switch gears. Tomorrow we’ll get the FOMC meeting minutes. The central bank has its work cut out for it trying to navigate the QE waters. Ben Bernanke has committed to an accommodative monetary policy for the United States. The Fed has pumped trillions of dollars into the market and trying to exit this strategy will be extraordinary difficult. How do you remove an addict from its preferred drug without causing the maximum pain? Perhaps we should accept the pain as temporary? Very interesting to see how this all plays out. For us Trend Followers price action will dictate how we react. Distribution remains elusive and with the market continuing to make new highs without any institutional selling is not a recipe to sell. We’ll let the market come to us rather than predicting where it will go next. Short-term Trends TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/19/2013 153.25 0.75% IWM UPTREND NO CHANGE 2/19/2013 92.55 0.88% QQQ UPTREND NO CHANGE 2/19/2013 68.24 0.72% USO DOWNTREND NO CHANGE 2/19/2013 34.96 0.69% UNG DOWNTREND NO CHANGE 2/19/2013 18.30 2.92% GLD DOWNTREND NO CHANGE 2/19/2013 155.33 -0.28% SLV DOWNTREND NO CHANGE 2/19/2013 28.44 -1.35% DBC UPTREND NO CHANGE 2/19/2013 28.24 -0.39% FXY DOWNTREND NO CHANGE 2/19/2013 104.77 -0.02% FXE DOWNTREND NO CHANGE 2/19/2013 132.81 0.19% TLT DOWNTREND NO CHANGE 2/19/2013 116.5 -0.50%
Sunday, February 17, 2013
The Big Wave Trading Portfolio remains under a strong BUY signal generated at the start of the year. There continues to be absolutely no sign that the market is finished with its steady and unusual move higher. Trying to guess when the move will end is futile and until we see real cracks in the price/volume armor there is nothing to do but to continue to ride the trend higher until it shows signs of reversing. Those signs that we will be looking for include: 3 to 5 distribution days in 2 to 3 week time span on the indexes, climax runs in leading stocks, new highs in leading stocks on higher volume, huge volume reversals below the 50 DMA, a lack of new breakouts in quality names, and/or breakouts in quality names immediately reversing on heavier volume. Until we start to see a variety of the list above, we will continue to hunt for new long positions as they setup and breakout from sound consolidation patterns. However, we will continue to remain cautious on our purchases as the markets uptrend is without a doubt the most strange steady move higher I have ever seen or I believe studied in my career. While I have not backtested the data, the price pattern the past month and a half has been beyond unusual. To rally almost every day without having an up session above 1.25% is just the strangest thing I have seen to a start of a sustained uptrend. If you want to see how a real powerful rally looks that allows us to get 100-200% invested very quickly take the time to study the Nasdaq March 2003 low or the recent Shanghai SE Composite December 2012 low. That is what the start of real lasting powerful bull markets look like. They do not look like what we currently have in our indexes. I continue to refuse to increase the size of any new long position to the normal pre-2009 levels as long as we continue this strange wedging pattern higher. The longer we go without a normal correction or the longer we go without producing another powerful up day (I am looking for at least 1.5% and would really like to see a 2% move) on strong volume the higher our chances become of some sort of flash or quick crash that could easily wipe out our post 1/2/13 gains in a couple to a few trading sessions. The longer we wedge like this, without a powerful up day, the more concerned I will become and the more careful we will be of adding new long positions. This continues to be a pure-QE fueled uptrend and that is evident in the volume patterns on the indexes, ETFs, and leveraged ETFs. Volume is simply not confirming the move as it should if the uptrend was “normal.” So that is what we are “worried” about here. While it is something we are concerned about, we will continue to take signals as they are generated making sure that our opinions have nothing to do with the actual execution of our methodologies. A quick reminder to new investors. Big Wave Trading always and I mean always removes risk when we are wrong on any and all positions. Losses are never held. If we take a position and it violates our clear stop level, the position is liquidated immediately. Losses are never justified or held. Ever. Period. Big Wave Trading also employes historically sound profit taking methodologies created and proven by some of the best traders and managed futures funds since the dawn of time. If you are not familiar with these methodologies, we recommend going to the book section (which has not been updated in a few years–we will be doing that soon) on our website and purchasing these books to understand the methodologies that we incorporate in our portfolios. Aloha from a very cold, windy, and shockingly rainy west side of Maui. Have a great and profitable upcoming week. Once again, aloha. Top Current Holdings – Percent Return – Date of Signal CSU long – 77% – 9/4/12 CAMP long – 72% – 9/4/12 HEES long – 64% – 9/4/12 EAC long – 61% – 12/17/12 FLT long – 54% – 9/6/12 AXLL long – 40% – 1/4/13 ASTM short – 36% – 7/17/12 POWR long – 35% – 12/11/12 CPSS long – 33% – 1/31/13 MNTX long – 31% – 1/17/13
Wednesday, February 13, 2013
Stocks enjoyed buying through the early morning session as Europe rebounded from its recent pullback. By 10:30 the market changed behavior as it simply could not maintain its high of the day. Thirty minutes prior to the European close the market took a nose dive and hit the lows of the session. Volume was running higher throughout the session and indicating the market had begun hitting stall speed. A late day push from CSCO and AAPL assisted the market lifting from the lows of the session, but the Dow Jones Industrial Average did not escape a day of distribution. Tough to call a stall day on the NASDAQ, but for back to back days the index has been unable to hold the highs of the day. The market is having a tough time with the highs up here. We remain in an uptrend and while there are subtle signs of cracks we haven’t had an all out sell signal. CSCO reported earnings after the bell and they beat their numbers. However, the initial pop the stock enjoyed was short lived with the stock pulling back. The stock has been on a heck of a run since November contributing to the success of the NASDAQ. Given the action now it appears all is well with the stock, but tomorrow is a new day and anything is possible. If you are long the stock, just know where your exit is. It appears the past few sessions earnings have not been kind to the majority of stocks. PRLB is an exception after earnings. The stock blasted higher with volume to boot. A very good sign for those who are long the stock. PCYC was another earnings winner. CMCSA started the day off right, but like the market was unable to sustain the high. The loss of the day came from a growth stock RAX. RAX clearly disappointed the street as the stock fell hard in massive trade. This is not what you want to see out of a growth name. BWLD was another loser on the day. Earnings season has created quite the volatility in stock movements. INVN and KORS continued their slumps. There are positive and negatives to the current market rally. Everyone and their mother are expecting a pullback. When and how this market correction unfolds is anyone’s guess. It is tough to really say we have hit a market top without major distribution following these stall days. Know your exits and wait for your price signals to hit.
Tuesday, February 12, 2013
NASDAQ Composite continues to lag behind the Dow Jones Industrial Average and the S&P 500. Volume rose across the board, but remained below average. The NASDAQ notched a stall day and although it failed to register a day of distribution. Stalling days are nothing new and all it will take is for the NASDAQ to eclipse today’s high. Two star industries on the day were XLF and XHB as both groups appear to be ready to run higher again potentially in a blow off move. End of day action took the market off its highs, but the S&P 500 and Dow were able to escape too much damage. AAPL weighed on the NASDAQ once again as the stock continues to prove it is a laggard. One question would be is the stock the canary in the coal mine? There is no question AAPL’s products are great, but is the action in the stock foreshadowing something in the overall market? Or is it simply a laggard stock and should be completely ignored? Time will tell where this stock will end up. However, we know the stock is in a downtrend and is all we need to know. Wednesday we’ll see the market react to the State of the Union. President Obama’s speech is pretty much known as he will revert to ideas he trumped on the campaign trail. More taxes and more spending (disguised as “investments”) will be proposed. The President has a way of delivering a great speech and this should not be any different. Democrats will praise the president while Republicans will detest it. After the speech all eyes in the political world will pay attention to the Sequester on March 1st. A few disappoints in earnings this morning with KORS and INVN reversing gains. While KORS was a viable gap its inability to hold onto its opening price certainly puts a blemish on the stock. INVN was just terrible. In the after-hours session we had a few leading stocks have a tough time. RAX for one has been a stalwart for this market. Unfortunately, the stock fell 10% in the after-hours session. PCYC a thin name jumped 2% after reporting earnings. A stock to watch for a potential gap move at tomorrow’s open. NTGR and BWLD were on the negative side as well with both stocks falling hard. Not a pretty picture for the majority of earnings with only a few bright spots this afternoon. Regardless of your opinion of the market we remain in an uptrend. This may or may not change tomorrow, but if it does we are prepared.
Monday, February 11, 2013
Today was largely an uneventful day as volume was well below average and well under Friday’s level. Sellers continue to be on vacation as buyers were able to lift the market into the close. AAPL was the talk of CNBC, but the stock remains in no man’s land despite the potential for the company to return cash to its shareholders. The Yen continued its decline as the Bank of Japan is hell bent on destroying its currency. In commodity land crude oil jumped back to 97 and appears the commodity is headed above par. It remains to be seen if these high crude prices will hurt the economy. We remain in our uptrend and at this point we don’t see enough evidence it will end any time soon. Tomorrow we’ll get the President’s view of the state of the union where we’ll l likely hear about new spending measures. FSLR and SCTY moved and while we have high crude oil prices the President will likely renew his call to invest in solar. We simply see two stocks moving and at the moment it appears the industry is improving. Free government money is nice and when you couple it with higher crude prices solar certainly looks like a hot industry. Europe continues to have issues and the DAX closed below its 50 day moving average again. The EURO has gained quite a bit because at the surface the ECB is not set out to destroy it. Our short-term trend model has been long FXE for quite some time. How long will it last? It is anyone’s guess, but for now the currency is in an uptrend. The Yen continues its decline and the dollar remains stuck in the middle. Currency markets have a funny way of making headlines and for now FXY and FXY remain in solid trends. Bulls are looking for a correction to buy and bears are looking for a correction to sell. Sentiment continues to be bullish, but either camp has yet to win. Remember to have a game plan in place! TICKER ST TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/11/2013 151.77 -0.02% IWM UPTREND NO CHANGE 2/11/2013 90.70 -0.11% QQQ UPTREND NO CHANGE 2/11/2013 68.01 0.03% USO UPTREND NO CHANGE 2/11/2013 35.12 1.21% UNG DOWNTREND NO CHANGE 2/11/2013 18.45 0.49% GLD DOWNTREND NO CHANGE 2/11/2013 159.70 -1.16% SLV UPTREND NO CHANGE 2/11/2013 30.00 -1.41% DBC UPTREND NO CHANGE 2/11/2013 28.45 -0.35% FXY DOWNTREND NO CHANGE 2/11/2013 104.42 -1.20% FXE UPTREND NO CHANGE 2/11/2013 132.94 0.26% TLT DOWNTREND NO CHANGE 2/11/2013 117.12 -0.08%
Saturday, February 09, 2013
The Big Wave Trading Portfolio remains under a strong BUY signal from 1/2/13. There remains absolutely zero indications, via price action, that there is anything to do but ride the trend higher here. Despite the constant discussions of what is wrong with this rally and how extreme it is (we will go over that below), stocks continue to breakout from solid consolidation patterns with other stocks either trending up since breaking out or consolidating in preparation for possible breakouts. As long as we continue to see high quality stocks setup, consolidate, and breakout, we will remain buyers, despite the “overbought” conditions of the market. And trust me we are extremely aware about them at Big Wave Trading. While we remain buyers of stocks “up here,” we are being very selective and using appropriate capital for a market so extended. If we had more of our current holdings looking like they were putting in climax or parabolic type runs we would be more worried and would begin to hunt for protective put positions in the indexes. However, our longs continue to act orderly and do not exhibit the patterns seen at a market that is doomed to soon top. It still very well could but the price action in the market and stocks does not suggest that. We read all the headlines. We see all the news. For instance, 3-month sum mutual fund and ETF inflows are at 10 year highs, weekly mutual fund inflows are at 13 year highs, mutual funds have the least amount of cash on hand in 50 years, the VIX is too low at 13, the bulls are dominating the bears on the II (55 vs. 21) and AAII (43 vs. 30) surveys, and stocks are overbought on short-term oscillating indicators. That is all fine and well and we definitely take all bit of information into consideration as we prepare for the inevitable pullback. However, until it actually happens, there is no reason to take defensive measures now by selling stocks or eliminating new long positions. Imagine not buying the gap up in LNKD on Friday because you thought the market was too high. It clearly didn’t care what you thought and proceeded to move higher throughout the session. Therefore, until we get our 3-5 churning or distribution days in the market over a period of 2-4 weeks, we will continue to take long signals but keep the new positions relative to the overall safety of their pattern and the continuation of the overbought market. When the tide changes, we will take our profits when our signals are triggered and will add some protective put positions. Until then, the trend has been our friend throughout 2013 so far and until that changes it is wise to remain its friend. It will change. That you can be sure of. As of Friday, however, it is still up across all major market averages. Have a great rest of your weekend everyone. I wish you a very profitable upcoming week. Aloha from a very warm and sunny Maui. TOP CURRENT HOLDINGS – PERCENT RETURN – DATE OF SIGNAL CSU long – 70% – 9/4/12 CAMP long – 66% – 4/26/12 HEES long – 65% – 9/4/12 FLT long – 48% – 9/6/12 EAC long – 43% – 12/17/12 VRNM short – 43% – 4/10/12 POWR long – 39% – 12/11/12 ASTM short – 32% – 7/17/12 MNTX long – 31% – 1/17/13 AXLL long – 29% – 1/4/13 CPSS long – 25% – 1/31/13
Thursday, February 07, 2013
The Bank of England and European Central Bank kicked off the day with holding their rates steady. Neither rate announcement spurred much movement the reaction by the EURO certainly kicked off selling in the US markets sending the US markets to their lows of the session. Selling intensified throughout the morning as the EURUSD dove. Buyers were able to step into the market and were able to push the market back to the mid-point of the session. AAPL at the closed pushed the market back to opening prices as the company announced a review of its cash position. Volume ended lower on the session despite the buying at mid-day and AAPLs late day push. We remain in an uptrend and despite what you may see intra-day we’ll remain disciplined. AAPL has been quite the stock since the lows of 2009. It has been blamed for holding back the NASDAQ from hitting new highs. However, today it single handedly lifted the NASDAQ from its lows. Even in the last 15 minutes of the session it appeared the NASDAQ was ready to head back to the lows of the day when news hit regarding AAPL’s review of its cash. The stock did go ex today with its current dividend and with the news today it wouldn’t surprise me if a combination of a buyback and special dividend will be announced. Sentiment continues to run high amongst the bull camp. AAII bull respondents did slip from 48 to 43 with bears jumping to 29%. II Bulls hit the week at 55% (59% 5 year high) and bears coming in the week at 21% (16% 5 year low). NAAIM investment manager survey saw leverage come off the books to 95% long. Sentiment remains high here, but it can remain high for quite some time. Our uptrend remains in place and we have yet to see any major days of distribution. The same cannot be said for a few European indexes. The DAX, FTSE MIB, and IBEX all are below their 50 day moving averages with big time distribution. Europe may be cracking, but the US appears to be holding steady. Until we get signals of a market correction we’ll remain long. TICKER ST TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/7/2013 150.96 -0.13% IWM UPTREND NO CHANGE 2/7/2013 90.16 -0.33% QQQ UPTREND NO CHANGE 2/7/2013 67.30 0.09% USO UPTREND NO CHANGE 2/7/2013 34.68 -1.03% UNG DOWNTREND NO CHANGE 2/7/2013 18.54 -4.24% GLD DOWNTREND NO CHANGE 2/7/2013 161.84 -0.34% SLV DOWNTREND CHANGE 2/7/2013 30.46 -1.14% DBC UPTREND NO CHANGE 2/7/2013 28.44 -0.39% FXY DOWNTREND NO CHANGE 2/7/2013 104.71 -0.13% FXE UPTREND NO CHANGE 2/7/2013 132.92 -0.90% TLT DOWNTREND NO CHANGE 2/7/2013 116.93 -0.22% SLV changed trend today. Yes central banks have their printing presses in hyper drive, but we’ll follow our trend following signals.
Wednesday, February 06, 2013
Overnight the Nikkei jumped 3.8% as the country remains hell bent on trashing their currency. Europe resumed moving lower as the DAX fell more than 80 points. On this side of the pond futures were lower on the moves in Europe. Just before lunch time rumors of a special dividend helped send the stock higher dragging the NASDAQ along with it. Just after noon time fortunes for the market reversed and the market headed back to the lows of the session. It appeared as if sellers were going to rule the day. At the close, buyers were able to get the market back to breakeven. Our uptrend remains. Tomorrow we’ll get a rate announcement from the ECB followed by Draghi’s press conference. The EURUSD has been on a tear as of late as the US and Japan intend to print their respective currencies to oblivion. At this point the ECB can only cut rates as it cannot monetize debt. Draghi’s comments has moved the markets before and tomorrow shouldn’t be any different from the past. Which direction shall the market respond is anyone’s guess, but given our current uptrend we are going in long. There is some bright spots out there including DDD and SSYS. Banks continue to act well lead by BAC, GS, JPM, and one of our new longs for tonight. The action in EXPE left a bit to be desired and it appears more and more stocks reacting to earnings aren’t able to hold their breakouts. AMZN is one while having a rich PE has been performing well until the most recent earnings report. Another blemish is the two leading stock indexes we follow remain underperforming the overall market. This can change in a hurry, but we are keeping an eye on our leaders. Tomorrow morning will hold some fireworks and we are looking forward to seeing how our stocks react. Cut those losses short. Short-term trends: TICKER ST TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/6/2013 151.16 0.07% IWM UPTREND NO CHANGE 2/6/2013 90.46 0.42% QQQ UPTREND CHANGE 2/6/2013 67.24 -0.33% USO UPTREND NO CHANGE 2/6/2013 35.04 0.03% UNG DOWNTREND NO CHANGE 2/6/2013 19.36 0.94% GLD DOWNTREND NO CHANGE 2/6/2013 162.39 0.27% SLV UPTREND NO CHANGE 2/6/2013 30.81 0.16% DBC UPTREND NO CHANGE 2/6/2013 28.55 -0.14% FXY DOWNTREND NO CHANGE 2/6/2013 104.85 0.07% FXE UPTREND NO CHANGE 2/6/2013 134.13 -0.41% TLT DOWNTREND NO CHANGE 2/6/2013 115.98 0.82% QQQ changed back to an uptrend. This is due to the short-term nature of signals generating more signals.
Tuesday, February 05, 2013
The market quickly erased majority of Monday’s losses in one session. Volume rose across the board from Monday’s level. Monday’s have been for quite some time light volume days and higher volume kicking in today was not a surprise. Banks led the way while Small caps lagged along with the Dow. One day does not make a new trend and why we weren’t quick to jump off the bandwagon yesterday. Volume on the NASDAQ has been above average both days this week and we’ll need to see some price movement with this volume. We remain in an uptrend and will continue to act accordingly. Interestingly enough the QQQs have flashed a new Downtrend in our short-term trend following signal. It could very well be false, but a signal is a signal. IWM and SPY still remain in their uptrends for now. However, the FXY continues to fall as the Yen weakens considerably. It has been quite some time since we have been witness to this type of a collapse of a currency’s value in quite some time. If you have a process born from rigorous testing you follow it religiously. Stick to the plan and execute! Tomorrow we will not have any major economic releases. Today we did get January’s ISM non-manufacturing reading. Expectations were for a reading of 55 and the print was 55.2. The market rallied on the news of beating expectations by .2! December’s reading was revised lower to 55.7. New Orders declined from last month’s pace leading a few to believe the index will be heading lower this month. Bottom line the market liked the number and pushed higher. This week we’ll certainly need to see last week’s high taken out if volume continues to remain above average. Remember, to cut your losses! Short-term Trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/5/2013 151.05 1.01% IWM UPTREND NO CHANGE 2/5/2013 90.08 0.90% QQQ DOWNTREND CHANGE 2/5/2013 67.46 1.47% USO UPTREND NO CHANGE 2/5/2013 35.03 0.72% UNG DOWNTREND NO CHANGE 2/5/2013 19.18 2.73% GLD DOWNTREND NO CHANGE 2/5/2013 161.96 -0.02% SLV UPTREND NO CHANGE 2/5/2013 30.76 0.23% DBC UPTREND NO CHANGE 2/5/2013 28.59 0.39% FXY DOWNTREND NO CHANGE 2/5/2013 104.78 -1.37% FXE UPTREND NO CHANGE 2/5/2013 134.68 0.46% TLT DOWNTREND NO CHANGE 2/5/2013 117.02 -0.89%
Monday, February 04, 2013
Europe kicked off the selling with Spain and Italy taking on the brunt of the selling. The DAX fell 2.5% as the index fell in heavy volume erasing last week’s gains. Volume on the state side fell, but Monday’s have been light in general. Technology stocks led the decline followed by financials as NFLX bucked the trend and pushed higher. The VIX jumped above the 14 level as the fear index jumped to its highest level since the 3rd of January. Monday’s close didn’t help out the situation as sellers had the upper hand sending the market to the lows of the session. Today is just one day, but we did see a slight change in character as we have seen the market get support in the final 30 minutes. Our uptrend remains, but we are certainly on watch for our exit signals. It is no surprise Europe is back in the spot light has they have tried to implement protections that are simply band aids rather than real solutions. Iceland is a great example of what should be done, but the Central Banks are in control and would be overrun if Europe went the way of Iceland. Spain and Italy have been pounded by sellers with the DAX finally feeling the heat. In addition, Europe is facing a EURO who has been on a tear against the Yen and US Dollar. Exporters are feeling heat and with the Eurozone needing exports to fuel their economy their currency is not helping. Price action suggests further destruction. The first week of February has not started off well with today’s move. We were quite overbought after the big move in the market from the morning of December 31st. A rest here would be normal, but with the big declines in Europe a “rest” may be quite volatility. Stick with discipline and your plane and execute! The debate over the “great rotation” continues amongst market pundits. With the Federal Reserve buying $85bln in bonds a month how will yields go higher? If you aren’t going to fight the Fed in the stock market why would you fight it in the Bond market? Just follow the trend and it will treat you well. Short term Trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 2/4/2013 149.54 -1.12% IWM UPTREND NO CHANGE 2/4/2013 89.28 -1.21% QQQ UPTREND NO CHANGE 2/4/2013 66.48 -1.74% USO UPTREND NO CHANGE 2/4/2013 34.78 -1.61% UNG DOWNTREND CHANGE 2/4/2013 18.67 0.70% GLD DOWNTREND NO CHANGE 2/4/2013 162.00 0.34% SLV UPTREND NO CHANGE 2/4/2013 30.69 -0.29% DBC UPTREND NO CHANGE 2/4/2013 28.48 -0.35% FXY DOWNTREND NO CHANGE 2/4/2013 106.24 0.64% FXE UPTREND NO CHANGE 2/4/2013 134.06 -1.06% TLT DOWNTREND NO CHANGE 2/4/2013 115.54 1.28% UNG change in trend. Good news for those who heat their homes with natural gas!
Sunday, February 03, 2013
The Big Wave Trading Portfolio remains under strong BUY signals across the board. While we still hate the relationship between volume and price, we realize it simply does not matter in a world where printing currency is the modus operandi. With that being the case, price is our master and price remains in a strong uptrend. It is Super Bowl Sunday and there is no need to psychoanalyze the action of the previous week. It was strong and there continues to be excellent price action in leading stocks. That is all you need to know. It has been a great start to the year and we shall see if this continues in the month of February. Enjoy the Super Bowl everyone. Aloha from a very warm and beautiful Maui. Top Current Holdings – Percent Return – Date of Signal CSU long – 73% – 9/4/12 HEES long – 65% – 9/4/12 CAMP long – 57% – 4/26/12 VRNM short – 49% – 4/10/12 EAC long – 46% – 12/17/12 FLT long – 35% – 9/6/12 POWR long – 35% – 12/11/12 AXLL long – 34% – 1/4/13 ASTM short – 31% – 7/17/12 GNMK long – 27% – 11/16/12