Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a NEUTRAL condition, following this week’s action. While the price action was very strong with many stocks producing large moves, the overall indexes are still trapped in a trading range between their respective recent 1-month highs and lows. While a resolution to the upside does appear to be imminent and all but certain based on the action of stocks, it is still not guaranteed. There fore, the situation remains fluid and the next switch in the model will occur once prices either breakout or breakdown out of the current consolidation range. Overall, despite all the noise that has been flying around the market lately, the trend still remains up in this QE environment. As long as we are in a world where central banks can print their way out of short-term problems, we must respect that any selloff will be contained and supported. Until interest rates begin to rise or the Fed hints that they are about to rise, we must assume that a real floor (ie…reality) will not be found. There is a major bifurcation between economic reality on the ground and the economic reality of the stock market. There has never been this much of a divergence between macro and micro in the history of US markets and I think it is about as clear as an example that you can have in regards to the USA becoming a serfdom where 3% of the haves control the 97% of the have-nots. So as long as this is the reality we are in, it is the reality we must deal with. Low volume rallies, low volume support, and new highs on low volume following heavy and constant distribution will continue to be the norm. It is not historically what market historians are used to dealing with but we have never had a global economy where every nation basically moves in lock-step ever before. The bottom line is that it is what it is. It would be extremely nice to go back to the way it was before 2009. However, that is wishful thinking and does nothing for our bottom line. What does help the bottom line? A disciplined, no-emotion, back-tested approach to price action. As you can see below, we are dealing with the market quite nicely. What is unfortunate is that these positions are not there usual 10-20% each across the board in the BWT portfolios. However, when you have a market where price and volume metrics that you have used your entire career continues to not work, you have to trade according to your risk tolerance. In this kind of out-of-sync price/volume environment, I don’t mind keeping positions smaller and more diversified. It continues to be too risky to get heavily invested in any one signal as we were constantly before the 2009 rally. It is what it is. It isn’t bad. It isn’t good. It just is. Have a great upcoming week everyone. Great luck in your personal investing/trading. Aloha from the beautiful island of Maui. Top Current Holdings – Percent Gain – Date of Signal EAC long – 141% – 12/17/12 HIMX long – 123% – 12/19/12 POWR long – 114% – 12/11/12 RVLT long – 113% – 3/26/13 CSU long – 96% – 9/4/12 CAMP long – 90% – 4/26/12 GNMK long – 73% – 11/16/12 FLT long – 69% – 9/6/12 ASTM short – 65% – 7/17/12 HEES long – 63% – 9/4/12 SBGI long – 51% – 3/22/13 WAGE long – 45% – 1/8/13 V long – 30% – 8/31/12 CHUY long – 30% – 1/10/13 INSM long – 28% – 4/19/13 BBSI long – 28% – 2/13/13 AXLL long – 28% – 1/4/13 PFBI long – 28% – 11/19/12 HTA long – 25% – 1/2/13 CPSS long – 25% – 1/31/13