Big Wave Trading Portfolio Update And Top Current Holdings

“When you are starting out, it is very important not to get too far behind because it is very difficult to fight back. Most traders have a tendency to take risks that are too large at the beginning” – Gary Bielfeldt “Professional traders manage their trading to assume that each trade may be a loser.” -Peter Brandt The Big Wave Trading Portfolio is currently under a BUY signal after having to suffer through three straight SELL signals that were followed by cutting losses and returning to NEUTRAL. The current BUY signal is mainly being produced by the mere fact that the market will not sell off following all of the recent distribution days and is back above its 50 day moving average. Volume on the upside continues to be well below what we would consider a strong BUY signal and it remains a BUY signal basically due to these CANSLIM quality stocks. A lot of CANSLIM quality stocks have built or continue to build quality bases. On the day of the BUY signal on Thursday tons of CANSLIM stocks broke out of very constructive base patterns. Despite these very high quality long signals, Big Wave Trading is not investing up to the capacity that it should be now due to the recent false signals in our model which in the past has not produced three false signals in a row so fast. This is 100% a function of the current market and not our model as 1976-1978 did not even produce this kind of low volume misinformation. Clearly, price is the only thing that matters when stocks are trending up. Volume is irrelevant. At the same time, even if the chart is in perfect order, our portfolios will not tolerate losses and pair back anywhere from 10% to 25% of our positions in stocks if they show losses. Overall, it appears these breakouts are stronger than the breakouts in January as the current consolidation period has given many of these stocks base-on-base patterns or ascending base patterns. The bases these high quality stocks broke out of in January while sound came from the very volatile July-December period in the market thus making some of them suspect. This recent consolidation has tightened many of these charts up. While saying all of this, we are completely aware that the volatile market may throw us back into a NEUTRAL signal at any moment. Also, we realize we are deep in our third year of a QE led uptrend and we remain in our stance that we are near the end of this big bull market rather than a start of a brand new bull market. However, we do not trade off of our opinions. We trade off of real price signals based on 130 years of stock market history and 200 years of futures history. We may think we are near a top but if the market wants to move higher and we have signals we are taking them long. Top Current Holdings – Percent Gain (non-margin) – Date of Signal SWHC – 84% – 1/3/12 AVD – 71% – 1/10/12 LQDT – 53% – 2/1/12 BVSN short – 48% – 3/19/12 EPAM – 33% – 3/1/12 CPWM – 30% – 3/13/12 MNST – 30% – 1/13/12 SUNH- 27% – 3/9/12 PRXI short – 22% – 3/30/12

Big Wave Trading Portfolio Update And Top Current Holdings

“Profits always take care of themselves but losses never do. ” The speculator has to insure himself against considerable losses by taking the first small loss. In so doing, he keeps his account in order so that at some future time, when he has a constructive idea, he will be in a position to go into another deal, taking on the same amount of stock as he had when he was wrong.” –Jesse Livermore “Trading is a waiting game. You sit, you wait, and you make a lot of money all at once. Profits come in bunches. The trick when going sideways between home runs is not to lose too much in between.” — Michael Covel The Big Wave Trading Portfolio is under a SELL signal and is taking action on a day by day basis. Big Wave Trading is currently going short stocks that have had speculative run ups in the recent months that have reversed on very heavy volume. Big Wave Trading is also using inverse ETFs to take a short position in the retirement accounts. Big Wave Trading still sits on a high level of cash and is ready to put it to work as signals generate from what appears to be a coming market sell off. While we reserve no bias as to the market at any time, our models are extremely bearish with internals and externals that make up this model giving us very clear “warning” signals. This warning signal is a potential large market pullback. This is based off of several time, price, and volume indicators and actual action of leading, speculative, and defensive stocks. The big surprise about this is that the signals are so bearish yet we remain near recent highs in the stock market. We do not see this as strength and instead see this as a last ditch effort by bulls to hold up the tape via a very few select stocks. The leaders are clear: CMG PCLN and AAPL. Their extended to parabolic runs from 2009 to now are very clear on an arithmetic long-term weekly or monthly chart. The recent price and volume action is showing distribution. The action on these leading stocks on top of the accumulation in inverse ETFs, the distribution in the indexes and ETFs, the breakdowns on large volume in CANSLIM quality stocks, and the void of new longs showing up in my scans make it very clear where the next big move is going to be. When will it happen? There is not one individual on the planet Earth that can answer that question. The sad thing is many people still believe there are people that can do this. They can not. No human, robot, or other entity can predict the future. It can’t be done period. Our portfolio recently was forced to go from SELL to NEUTRAL to SELL to NEUTRAL back to SELL over the past two weeks due to our cut losses being hit off the SELL signal. There is always a safety net. For the first time in real time, since using this methodology following 50+ years of backtesting, we had a BUY or SELL signal not change despite our cut loss being hit. Our second SELL signal was hit with a cut loss via our cut loss/safety strategy. However, the model did not switch from SELL. It was a discretionary decision based on my part to cut our losses to protect against a further melt up on low volume. The fact we are back into a SELL signal proves that the model knows more than I know. That is always comforting to know. In past studies, having three signals generated like this in a row has not happened (the market is always doing something knew!). However, when backtesting BUY to NEUTRAL to BUY or SELL to NEUTRAL to SELL signals over a one to two week time frame, the second signal was true over 85% of the time. Our speculative guess (and that is all that it is at this current point) is that having three in a row like we just went through is an even higher odd event. We will know soon enough. Bottom line, the most important attribute of our model is that it keeps us on the correct side of the market. If the market continues to breakdown, we will press our position on the short side. If the market does not break down, it is going to be a few weeks to months before these very broken charts are going to be able to fix themselves and thus even if we re-enter a BUY signal chances of being able to put funds to work in any significant way appear thin (unless we have a HUGE volume 5% up day–that would obviously change the models mind). However, if we do enter a new BUY signal you can be 100% sure our operations on the short side will end. Another note on the current market, the DJIA is now leading the Nasdaq RS wise and Utilities, Consumer Staples, Tobacco, and Aerospace/Defense stocks and groups are showing up in my stock and ETF scans. We have almost total confirmation that the old saying “sell in May and go away” will be of more value than “buy the Facebook (FB) IPO on opening day.” One last reminder, Big Wave Trading never holds on to a losing position. If we go short or long any position and it does not move in our direction immediately, we begin selling. No questions ask. We don’t care about being wrong or right. That is for losers. We just want to win. To win big you are going to lose a lot. Those are the hard cold facts. Get used to it or find another passion. If this isn’t your passion, find someone whose it is. Top Current Shorts – Percent Gain – Date of Signal SWHC – 80% – 1/3/12 AVD – 69% – 1/10/12 LQDT – 46% – 2/1/12 CPWM – 32% – 3/13/12 EPAM – 31% – 3/8/12 ULTA – 29% – 1/13/12 MNST – 26% – 1/13/12 SUNH – 25% – 3/9/12 Top Current Shorts – Percent Gain – Date of Signal PRXI – 35% – 3/30/12 BVSN – 34% – 3/16/12 WZE – 30% – 4/10/12 SINO – 25% – 4/12/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio’s Market Model remains under a BUY signal. However, during the week, evidence started to mount that turned the model from leaning BUY bullish to BUY neutral. This means that less capital is being deployed in new long positions and the requirements for actually becoming a new long position in the portfolios is raised. There are various internal indicators we use to confirm price action on any individual stock. We now must see all of these line up confirming the move to become part of the portfolio. The BUY neutral stance will switch back to a full BUY signal if the market can break out here. If the breakout comes on higher volume, capital deployed in the new long positions will be increased significantly. If the breakout is on lower volume, capital will be increased only slightly. In saying this, the Big Wave Trading margin and retirement portfolios are nearly fully invested already. However, there is still 10-20% cash on hand due to new high quality longs failing. Recent longs in high quality CANSLIM names like RRTS VHS HEES FTK TLLP left us with cut losses and thus have us holding some cash on hand. Recent CANSLIM longs (four of them) the past two days are holding up very well but are not exploding higher immediately. This action in high quality longs is the biggest reason, besides the low volume on the indexes, we still lean heavily neutral until we see a breakout on the indexes. Big Wave Trading is also actively working on the short side of one of the biggest pump and dumps on the Nasdaq in years. We continue to short one individual stock (we currently have gains ranging from 4% to 27% under our operation) following any consolidation after a breakdown. The insane criminal practices going on with this stock by promoters and huge potential reward has left us with no other choice than to profit off the greed and evil of some horrible human beings. One final note: If the stock market does not breakout this week or next week and we begin to roll over, you can be 100% sure the Big Wave Trading Model will switch from BUY to NEUTRAL and then position itself accordingly as price and volume action on stocks, ETFs, and the indexes roll in day by day. Aloha and have a wonderful weekend.

Top Current Holdings – Percent Gain (non-margin) – Date of Signal

SWHC – 73% – 1/3/12
KORS – 67% – 1/17/12
AVD – 43% – 1/10/12
RF – 42% – 1/5/12
LNKD – 34% – 1/19/12
LHCG – 30% – 1/19/12
CERS – 28% – 2/9/12
ULTA – 26% – 1/17/12
CRMT – 26% – 11/30/11
CPWM – 25% – 3/13/12