Big Wave Trading Portfolio Update And Top Current Holdings

Due to the distribution this week in all of the major market indexes, the breakdowns in leading stocks, and constant lagging in the Russell 2000, the market direction model has switched to NEUTRAL on all major market indexes. The short-term current market environment has gotten choppy over the past few weeks and this action is definitely weighing on the model. The lagging Relative Strength of the Nasdaq and Russell 2000 has made this rally all year long suspect but our individual long signals continued to work relatively well despite this. This is more of a byproduct of our long signals coming from big-cap big-board indexes. However, the overall lagging action of the Nasdaq and Russell 2000 was always a cause for concern. It should not be assumed that since we are now under a NEUTRAL condition that the very next signal is going to be a switch to a SELL mode. While it does appear the market is finally ready for a correction based on the way stocks are acting post-earnings, there are still plenty of leading stocks that are clearly forming decent consolidation patterns. A market reversal back to new highs would have many of these stocks easily breaking out of their current consolidation pattern. Therefore, it is best to remain very neutral here and wait to see which way the market breaks out of this consolidation zone the Nasdaq, Russell 2000, and SP 500 are in before convicting oneself to one side or the other of this market. We will continue to play individual stocks as they produce signals in either direction, keeping capital very limited in our selections during this bifurcated US economy and stock market. As long as the market rallies overall on low volume, it is going to be very hard to go 5%, 10%, and science forbid 20% long on a new long or short signal. We will just have to keep taking what the market gives us, either concentrating heavily into the best leading stocks in leading industry groups like Biotechs or keeping individual plays at a minimum with tight stops. The most important play for us right now is to continue to have a lot of cash on hand in case we get a screaming signal to the short side signaling that this market is done on the upside. The other scenario is having a lot of cash on hand in case the market breaks out higher and we get our once-reliable extremely strong price/volume signal to get heavily long a handful of leading stocks. While the latter scenario seems quite implausible it is still a possibility. However, truth be told, we are really waiting to hammer this market on the short side once it becomes apparent the QE low volume stock market manipulation rally is coming to an end. We might still be three years away from that though. Until then, we will ride the bucking bronco. Have a wonderful and profitable upcoming week everyone. Try not to psychoanalyze everything out there too much. Aloha! Top Current Holdings – Percent Gain – Date of Signal EAC long – 154% – 12/17/12 HIMX long – 130% – 12/19/12 CSU long – 96% – 9/4/12 POWR long – 87% – 12/11/12 CAMP long – 69% – 4/26/12 GNMK long – 69% – 11/16/12 FLT long – 65% – 9/6/12 ASTM short – 64% – 7/17/12 HEES long – 58% – 9/4/12 SBGI long – 41% – 3/22/13 WAGE long – 38% – 1/8/13 CPSS long – 35% – 1/31/13 BBSI long – 34% – 2/13/13 PFBI long – 29% – 11/19/12 AXLL long – 28% – 1/4/13 GLL long – 28% – 2/14/13 V long – 27% – 8/31/12 CHUY long – 25% – 1/10/13

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading portfolio remains under a BUY signal which was regenerated on March 5th. The Russell 2000 was the only index under a NEUTRAL condition heading into the most recent week but has now re-switched back to a BUY mode as well. Overall, following this week’s action, the uptrend remains in tact and there are no current pressures on the BUY signal. The only problem remains the same problem we have had for four years. There is still a lack of volume conviction in the overall stock market indexes on days when we rally. If there was broad volume across the board, Big Wave Trading would be heavily on margin during an uptrend like we are witnessing. However, without total confirmation across the board BWT continues to operate from a side of caution on new signals as severe sharp corrections are normal in low volume rally market environments. That being said, there continues to be a plethora of actionable buy signals across various investing methodologies and as long as signals are triggered on an individual stock by stock basis we will continue to go long our signals as they are generated. The only difference from this rally and all other previous rallies pre-2009 is the size of new long commitments. We continue to invest below what we would consider normal size per each new long signal. Going forward, we will continue to hunt and take action on our long signals and will constantly be vigilant and prepared for a significant correction. As long as the world is printing and commodities are falling, we do not have to worry about inflation or hyper-inflation influencing our dollar’s purchasing power. As long as world-wide QE and ZIRP is in effect, we will continue to focus on price only. Price is all that matter right now and we will continue to keep it simple. Have a great and profitable upcoming week in the stock market, everyone. Aloha from a very beautiful and warm Maui. Top Current Holdings – Percent Gain – Date of Signal HIMX long – 145% – 12/19/12 EAC long – 139% – 12/17/12 CSU long – 106% – 9/4/12 POWR long – 93% – 12/11/12 FLT long – 73% – 9/6/12 CAMP long – 73% – 4/26/12 HEES long – 67% – 9/4/12 ASTM short – 63% – 7/17/12 GNMK long – 60% – 11/16/12 SBGI long – 51% – 3/22/13 CPSS long – 43% – 1/31/13 WAGE long – 36% – 1/8/13 AXLL long – 35% – 1/4/13 BBSI long – 32% – 2/13/13

Big Wave Trading Portfolio Update and Top Current Holdings

The Big Wave Trading Portfolio remains under a BUY signal re-triggered on 3/5/13 following the original signal on 1/2/13. There are currently zero conditions weighing on the model, despite the below average volume. Any assumptions and presumptions we have towards the current volume on the rally have been eliminated due to the QE and ZIRP policy being initiated by the Federal Reserve. We continue to go long signals as they arise and will not try to guess when the market will “top” or “pull back.” At this point the only signal that we are paying attention to is price. Price is the only thing that matters, as we have been saying all year long. Volume has not mattered on rallies in four years and there is no reason to believe it will matter any time soon. While it would be nice to see the market pullback for more than a couple of weeks on below average volume and then rally on higher volume it should not be expected. What seems most plausible given the situation that is occurring world wide is that we will end up in another asset bubble where higher valuation multiples are placed on stocks. Despite the lower earnings growth expectations investors are still paying higher prices for stocks believing that the Federal Reserve has eliminated the tail ends of the curve. As all experienced traders know this will eventually end badly. However, that is not happening yet and the only thing we can do is ride the trend until the end when it will bend. If another asset bubble is to occur we are in great position to profit handsomely and then will be in a better position to sell our winners as they break below key trailing moving averages on heavy volume. If the market can get parabolic that will allow us better entries on the short side (puts). For now, there is nothing to do but continue to follow price. As you can see below, following a very choppy 2011 and 2012, it is finally paying off like it normally has for us at Big Wave Trading. Someone asked recently that if the stocks below are our top holdings (top 50%) what are our our worst holdings. We currently have two. Both are automobile related equities and both are showing less than a 1% loss apiece. We do not hold losing positions at Big Wave Trading. Before any order is given to our brokers we know where we will exit if we are wrong. We religiously obey our final exits. We never let a loss run and are quick to leave if we are not proven correct immediately. As we go through equity/derivative drawdowns like we did in 2011 and 2012 we reduce the size of our positions and are quicker to cut losses. As our equity/derivative profit/loss line trends higher we will subsequently increase size and allow more “wiggle” room in our trades. The bottom line is that losses are never tolerated. They are always eliminated. No excuses. Have a great rest of your long holiday weekend everyone. Aloha from a very, yet again, windy and overcast Maui. Top Current Holdings – Percent Gain – Signal Date HIMX long – 127% gain – 12/19/13 CSU long – 113% gain – 9/4/12 EAC long – 98% – 12/17/12 POWR long – 96% – 12/11/12 CAMP long – 95% – 4/26/12 FLT long – 72% – 9/6/12 CPSS long – 70% – 1/31/13 HEES long – 70% – 9/4/12 ASTM short – 64% – 7/17/12 GNMK long – 48% – 11/16/12 AXLL long – 46% – 1/4/13 MNTX long – 43% – 1/17/13 WAGE long – 38% – 1/8/13 V long – 32% – 8/31/12 CHUY long – 30% – 1/10/13

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a BUY signal, as the market consolidated recent gains the past week. Volume was lower overall for the week and that is always bullish for a continuation of a trend. Unfortunately, when the market rallies it rallies on below average volume. The good news the past week was the selling volume was also below average. This action the past week has helped form a lot of solid consolidation patterns out there and two stocks that are on watch from the 3D printing arena include DDD and SSYS. If the market decides to move higher those two stocks will definitely be closely followed. On top of that, there are plenty of other stocks forming constructive weekly consolidation patterns. If the market breaks out to new highs here, expect these stocks to follow. Another positive for the market was the inability to really sell off following the Cyprus and Eurozone news all week long. The fact the market held up so well, despite this development, is a testament to the power of worldwide QE. When the market does not sell off on bad news, that is always a short-term bullish development. The other side, of course, is that a market that sells off on good news is a market flashing that it is in trouble. So, so far, so good. As long as leading stocks continue to do well and trend higher there is nothing to do but to follow the trend until it ends. While we are long a lot of stocks doing very well, we have our trailing moving averages to tell us when to get out partially or completely. To think that any emotion is involved in our current long positions is a grave mistake. We do not have emotions in regards to the stock market at BWT. We only have quantitative signals. Nothing more and nothing less. When we are wrong we cut our losses immediately like in a recent long signal generated in WNC on 3/15 that we had to reverse on 3/19. The good news about that loss is that the stock is now setting up in an even more constructive consolidation pattern thus making the next long signal a higher reward to risk ratio setup. On that same note, however, a further follow-through on the recent breakdown below the 50 day moving average will have WNC completely wiped off our watchlist for now. OK everyone. Try not to get caught up in all the Euro news dramafest this upcoming week, let your winners run and cut your losses short, and most importantly have a great rest of your weekend and upcoming week. Aloha. Current Top Holdings – Percent Return – Date of Signal CSU long – 104% – 9/4/12 EAC long – 92% – 12/17/12 CAMP long – 90% – 4/26/12 POWR long – 80% – 12/11/12 HIMX long – 76% – 12/19/12 FLT long – 70% – 9/6/12 HEES long – 69% – 9/4/12 CPSS long – 56% – 1/31/13 AXLL long – 46% – 1/4/13 WAGE long – 42% – 1/8/13 ASTM short – 41% – 7/17/12 GNMK long – 38% – 11/16/12 MNTX long – 36% – 1/17/13

Big Wave Trading Portfolio And Top Current Holdings

The Big Wave Trading Portfolio remains under a BUY signal that was reinitiated on 3/5/13 following a quick, yet ugly, pullback. However, while we are under a BUY signal we are very cautious up in these stratospheric levels in relation to the major market indexes respective 200 day moving averages. That being said, as we know, the trend is your friend until the end when it isn’t. Overall, the low volume new highs is problematic on a technical level and at the same time is getting problematic on a bullishness level. Before 2008 there is no time in the history of the United States stock market you could find the stock market rally on low volume to new highs, sell off on heavy volume, and then make new highs on lower volume. Yet, that has been the same pattern since 2010. Over and over. Eventually, it is going to end and when it does it will be ugly. While there could easily be more new highs and further upside, the fact that we are getting such an extreme level of bullishness in the Investors Intelligent survey is worrisome. With bulls now at 50% and bears at 18% we have some very extreme reading seen before market pull backs. Like I said while more upside is possible, and would be welcome as per our current holdings below, we are aware of how frothy stocks look up here. On top of the extreme level of bullishness and bearishness in the II Survey, we have seen Richard Russell go long and have seen Mila Kunis finally enter the stock market as it is clear stocks do nothing but move higher. Right? Well, we will see. Going into this holiday-short week, we will remain cautious bulls and position any new long trend following signals accordingly. However, holding current longs and looking for exit signals is going to be the priority. Have a great week everyone. Mahalo for reading and aloha from a Kona-wind blown-out west side of Maui. Top Current Holdings – Percent Return – Date of Signal CSU long – 115% – 9/4/12 CAMP long – 90% – 4/26/12 HIMX long – 76% – 12/19/12 EAC long – 72% – 12/17/12 POWR long – 71% – 12/11/12 HEES long – 71% – 9/4/12 FLT long – 56% – 9/6/12 CPSS long – 44% – 1/31/13 AXLL long – 44% – 1/4/13 WAGE long – 41% – 1/8/13 GNMK long – 37% – 11/16/12 ASTM short – 35% – 7/17/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Model switched back to a BUY mode on 3/5/13 following a switch to a NEUTRAL mode on 2/25/13. The switch to NEUTRAL on 2/25/13 in our analysis of over 130 years of stock market history should have not switched back to BUY mode so quickly. The price breaks on 2/20 and 2/25 have historically led to months of choppy trading or started downtrends outright. The fact that we switched back to BUY mode so soon is historically extremely out of the norm. However, this entire market choppy and slow uptrend from the 2009 lows coming on such below average weekly and monthly volume is also historically extremely out of the norm. Huge volume selloffs are quickly absorbed and new highs, not on higher volume but, on lower volume are soon followed. As we have stated before, nowhere else in the history of the United States stock markets can you ever find this trend. Low volume rallies have always been quickly destroyed by higher volume selloffs or do not last long and are followed by heavier volume accumulation to the upside. The odds times continue. On that note, that means the only logical thing to do is to follow price here and be very careful with the size of long commitments. While Big Wave Trading misses the days when we plunged on margin, today’s market environment does not bode well for that type of investing. A more conservative approach is respected here knowing that a 2010 and 2011 shock experience is always just around the corner with a low volume market rally. Therefore, we will continue to operate on the long side enjoying the paltry gains we see below (paltry in comparison to the gains we produced before the QE and ZIRP world we have been living in since March 2009), until a clear trend change becomes apparent. For now, the trend is up. We will obey our master–Price. Top Current Holdings – Percent Return – Date of Signal CSU long – 115% – 9/4/12 CAMP long – 95% – 4/26/12 HIMX long – 84% – 12/19/12 HEES long – 71% – 9/4/12 EAC long – 65% – 12/17/12 POWR long – 64% – 12/11/12 FLT long – 58% – 9/6/12 AXLL long – 36% – 1/4/13 WAGE long – 34% – 1/8/13 PFBI long – 31% – 11/19/12 CHUY long – 29% – 1/10/13 CPSS long – 26% – 1/31/13 V long – 25% – 8/31/12 GNMK long – 25% – 11/16/12

Big Wave Trading Portfolio Update And Top Current Holdings

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

Big Wave Trading Portfolio Update And Top Current Holdings

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

Big Wave Trading Portfolio Update And Top Current Holdings

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

Big Wave Trading Portfolio Update And Top Current Holdings

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