Stocks Pull back as Volume Rises on the NASDAQ

European markets were dealt with poor flash PMI data with France flashing a very weak PMI figure. Futures were set to open lower ahead of the 830 data release. Despite a better than expected Jobless claims figure and inline housing price index futures simply couldn’t muster the buying power. Sellers took hold of the market just after the release of the better than expected Philly Fed survey pushing the market to the lows of the session. Like a broken record as the Feds POMO began the market found its footing and rallied until the close of POMO. It is quite uncanny how POMO keeps this market afloat. Sellers had one more shot to send the market lower and did so just before 2pm rolled around. However, the support at the 2pm lows wasn’t able to keep the market from closing above the mid point of the day. The NASDAQ did notch a distribution day bumping its count up to 4 days. We remain in an uptrend, but the caution flag has been raised. Cyprus continues to be a thorn in the side of the market here. It may just be an excuse for pundits to use as this rally has gotten long in the tooth. However, we are seeing disappointing earnings from the likes of FDX and ORCL suggesting the economy may not be what people think. Both these stocks were acting well up until their most recent earnings report. Coupled with distribution piling up is something we are keeping an eye on. Mind you, we aren’t trying to anticipate a turn, but preparing to take the signals in whatever direction. Sentiment remains tilted towards the bulls, but we aren’t at extreme levels we saw back in February. AAII bulls came in at 39% and bears at 33%. AAII is a volatile survey and a stiff breeze will shift sentiment. II survey saw bears drop to 18.6% from 18.8% and Bulls drop to 47%. Again, bulls aren’t at extreme levels while bears are nearing an extreme. Sentiment is by far a perfect science, but an interesting talking point. Sentiment like overbought/sold conditions can remain for long periods of time. The market does feel like it is heavy and will correct here. Unfortunately for those who try to predict these moves were wrong last month when the market looked like it was about to correct. Anything is possible and sticking with trend following will reap the greatest returns over the long term. Have a great weekend and best of luck on your March Madness bracket!

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under BUY signals across the board. There is nothing still to do or think too much about as the trend higher is smooth and has come under very little pressure minus two minor distribution days in the Nasdaq Composite. Overall, many traders believe that it is time for us to take a rest or pullback. However, traders have been thinking this for a while and until it actually happens trading on that notion is not wise. On the sentiment front, it is getting very bullish out there for sure. However, nobody said it can’t get more bullish. Who is to say that bulls can not hit 90% on the Investors Intelligence survey? Who is to say it can not hit 90% on the AAII survey? Who is to say that the VIX can’t trade below 5 or hell even below 1? I know that is quite irrational but nothing about what has happened since 2008 has been rational. There is no need to believe it is time to start now. We would love to see a pullback here as it would most likely lead to a very nice consolidation period in many leading stocks that would make their upcoming next round of breakouts that much more powerful. Our biggest concern with a non-stop uptrend is the possibility of a hard reversal that might lead to a sustained downturn instead of a buying opportunity. However, that being said, it is all talking points at this juncture. All that matters is price, and sometimes volume (though it hasn’t mattered since 2009), and that is what we will continue to focus on. Set buy stops on your favorite stocks nearing breakouts to make sure you get long at the exact pivot points and you will do fine. If you wait till the EOD to buy breakouts in this market environment, you greatly increase your chances of getting caught in a normal shakeout/pullback in the stock. Great luck next week everyone. I wish you all a very prosperous week. Aloha. Top Current Holdings – Percent Return – Date of Signal CSU long – 71% – 9/4/12 HEES long – 64% – 9/4/12 CAMP long – 48% – 4/26/12 VRNM short – 48% – 4/10/12 FLT long – 35% – 9/6/12 ASTM short – 35% – 7/17/12 GNMK long – 30% – 11/16/12 POWR long – 29% – 12/11/12 EAC long – 27% – 12/17/12 HIMX long – 26% – 12/19/12

Stocks Take a Step Back in Quiet Session

For the 9th Monday in a row the market closes lower on very light volume. After Thursday and Friday’s trading sessions today’s pullback is a welcomed sign and a very bullish one. The Russell 2000 led the decline with the NASDAQ not far behind with losses of .56% and .41% respectively. The key point here was volume did not accelerate with the selling and dried up on the day. Institutions were not dumping stock today and for now a good sign heading into a fun filled central bank week. Wednesday the Federal Reserve kicks off the news week with their rate announcement in the afternoon. Tuesday we have a few economic releases, but the focus will be on Wednesday and would expect another day similar to what we saw from the market today. I am not trying to predict what will happen tomorrow, but merely pointing out volatility kicks in after rate announcements. We’ll be focused on the price action of our stocks rather than guessing where we may go from here. Sentiment continues to be quite negative. AAII Bulls have dominated the survey has of late and II bulls continue to disappear. Any interesting poll came across CNBC today and one that asked if the current rally was going to continue. 71% of respondents thought it was going to be short-lived and we’d head lower. Mind you this is CNBC whose job is to pump stocks and it was quite astonishing their viewers are that bearish. Is it that the investing public is too bearish on this market? Time will tell and so will prices. Today was much of a do nothing day. A very boring day, but one that was a good step forward for our buy signal.

Stocks Limp Into Month End After a Poor Showing for the Month of May

End of the month volume poured into the market at the close, but failed to end stocks at the highs of the session. GDP came in line as expected, but at a paltry 1.9% far from where this economy needs to be at for a sustainable recovery. Sellers had dominated majority of the session and for obvious reasons. The rumor mill continues to swirl as Europe tries to figure out a way to sort its mess. Bond yields slid to their lowest levels as US Treasuries continue to be a safe haven among investors. Stocks did find their footing by the end of the day, but the rally left a lot to be desired. Sentiment week over week tilted towards the bears this time around. AAII Bulls dropped from 30% to 28% and bears jumped back over 40% to 42% from 38% last week. The story with the Investors Intelligence survey isn’t the number of bulls or bears, but the number of folks who are neutral. Short-interest remains near 5 year highs despite the lack of bears in the market. A very interesting development nonetheless and something we’ll continue to keep an eye on. Tomorrow we’ll get May’s job figure and unemployment figure from the government. Economic news has been disappointing as of late and it is hard to think employment numbers will be any different. However, the government can manipulate the numbers so anything is possible. More importantly will come the reaction to the numbers and the price and volume action for the remainder of the day. We can have all the opinions in the world that sound logical and “right,” but at the end of the day only price matters. We need to be focused on what matters: price. Enjoy the weekend coming up and make sure you get out and enjoy life a bit!

The Dow and Russell 2000 Close Positive as the NASDAQ 100 Limps into the Close

Economic news was mixed with a disappointing durable goods figure and a better than expected Kansas City Fed Manufacturing reading. The dollar rose again as the European situation continues to act as an annoyance to the market. Europeans cannot get their act together and we continue to suffer having to see it used an excuse for bad execution. Volume dropped on the day and below average showing institutions weren’t dumping stock. We have seen the market gain support at the lows in back to back sessions as a sign buyers are willing to step in. Today was day 4 of an attempted rally and we’ll be looking for a follow-through day soon if this rally has any legs. The number of AAII bulls jumped back above 30% since it hit lows last week. Bears dropped below 40%, but held just at 38%. Sentiment remains bearish, but well off the extreme levels we saw last week. The Investors Intelligence survey didn’t move much, but tilted towards the bears. Sentiment is by far from the holy grail of investing indicators, but it does help at extreme points. Last week we saw a market massively oversold and sentiment heavily skewed towards the bears. For now, we have lifted these conditions and move forward. Cloud computing stocks took it on the chin after NTAP reported earnings. The stock got hammered and two other names FFIV and VMW were handed heavy losses as well. These moves along with DELL held back the NASDAQ. FFIV may have found support at its 200 day but cloud stocks have not been the leaders like they were in October of 2010. Former leaders tend to be the best shorts and if any of these stocks give us the signal we’ll jump aboard. This market still remains in a precarious position. The S&P 500 and NASDAQ have put in a lower high (end of April) and a lower low here in May. We are in a down trending market. Remember, in the fourth year of a bull market on average a 9 month bear market occurs. Given the lower high and lower low we could be in the midst of the 9 month bear market. Anything is possible and we’ll stick by our disciplined trading no matter what the market has in store for us. Have a great memorial day weekend!

AAPL Falls as Buyers Continue to Stay Away from the Market

Disappointing Philadelphia Fed and jobless claims figures help set a negative tone for the day. Europe continues to dominate the fear index and FB continues to dominate CNBC’s content lineup. The true story of the day was at the end of the day with sellers taking it to the market. AAPL was a large part of the NASDAQ decline of 2.1%. The market is now in a real danger zone with the lack of buyers willing to step up could make it very difficult for this market to regain its footing. Big Wave Trading continues to operate under a sell signal and we continue to look for this market to continue lower. Sentiment continues to be negative, but the Investors Intelligence survey continues to lack the negative bearish sentiment. AAII survey certainly saw bears jump in terms of percentage and its bull ratio near lows, but the lack of bears responding to the II survey is somewhat concerning if you are bullish. The NASDAQ has corrected roughly 10% from its March highs which should be ushering in a bearish view point. However, we continue to see the neutral camp dominate the II survey. Given our current situation nothing that happens from here on out will not surprise us. FB will be an entertaining IPO and will likely be a wild ride given the current market situation. We are oversold and a bounce would not be out of the ordinary for a quick snap rally to occur. Tomorrow’s options expiry will certainly provide the morning with fireworks. The oversold nature of this market tomorrow would be as good of a time as any for this market to push higher to work off the current oversold conditions. Cash is king here and we are looking forward to the weekend. Get out and enjoy the weekend!