Turnaround Tuesday Sends Stocks Higher as Trading Volume Jumps

The Dow closed higher on Tuesday for the 18th straight week moving higher by more than 100 points. Leading the market higher was the Russell 2000 jumping more than 1.25%. S&P 500 gained more than 1% while the NASDAQ lagged finishing higher by .69%. Surprisingly the VIX jumped more than 1.75% outpacing the S&P 500. Is a big point move coming? AAPL was hit hard during the trading session sending the NASDAQ lower and ultimately keeping the NASDAQ from bigger gains. Despite the AAPL sell off the NASDAQ found support along with the rest of the market pushing up into the highs of the session. Another bullish session for the market reminding those who are fighting the trend is very dangerous. Financials were a hot sector today led by BAC, GS, and JPM. These stocks have been lagging the general market since March. A positive sign for this uptrend would be to have financials participate. GS breakout is solid with volume following price something we haven’t seen very much from this market. Many will look to find the catalyst for the moves, but in the end does it really matter? No, all that matters is that you take the signal and ride the move higher. Volume pushed higher today and it was above average. We haven’t seen volume on new highs in quite some time and above average to boot. Low volume new highs have been a staple for this market and today was just a break from the norm. We don’t have any evidence today is a top in the market and given what we saw from Financials today we should continue to push higher. We can think of plenty of reasons for volume like we are beginning to see panic buying. However, until we see real signs of a market top we aren’t going to begin fishing for reasons. One thing that will be interesting to watch will be JGB – Japanese Government Bonds and how their yields move over the course of the summer. The US 10 year treasury has moved roughly 30 basis points from their lows. A big move in yields will have adverse effects on debt servicing costs. Something to keep an eye on as time moves forward. Rising yields are not good for those who have a heavy debt load. Until this trend ends we are going to stick with it.

Stocks Extend Gains Closing Higher for the 4th Straight Session

This week has favored the bulls as the market closed higher with gains for the fourth straight session. Volume ended mixed falling on the NYSE while running higher on the NASDAQ. A report on PC sales sent the likes of $MSFT, $INTC, and $HPQ lower putting pressure on the NASDAQ. Jobless claims were better than expected a far cry from last week’s big disappointment. Import prices fell more than expected showing inflation has yet to show up despite the Federal Reserve’s 80+ billion a month easing program. Our uptrend remains intact and it will take quite a bit to knock this market off its uptrend. Sentiment has made a big jump this week. II survey continues to favor more bulls with more than 50% of its respondents are bullish with just 20% in the bear camp. The big jump came from the AAII survey with almost 55% responded as bearish. A big jump week over week with last week’s Non-Farm Payrolls likely to be blamed for the overly bearish reading. AAII are individual investors and are more likely to flip flop on their views of the market much more than the II survey. I can’t remember ever a time where AAII bears were more than II bulls, but yet we have it here. We don’t care if this is good news or not for our uptrend, it is quite amusing to see the disparity between the two camps. Tomorrow we’ll get a read on Advance Retail sales and for some reason I get the feeling they’ll be better than expected. $XRT certainly says it will be better! However, $JPM and $WFC release earnings prior to the retail figures. Many banks have been lagging the overall market and we are about to get a heavy dose of earnings releases from the group. We have noted before the banks have provided the S&P 500 with the lion share of earnings growth last year and analysts are expecting the same for this year. Tomorrow we’ll get the first view of how bank earnings could be shaping up for the first quarter of 2013. We are in an uptrend and we’ll favor the long side of the market. Until we get heavy distribution and leaders falling we’ll get neutral. Until then, we are full steam ahead on the long side.

A hiccup at the Federal Reserve led the central bank to release their latest meeting minutes at 9am EST. Despite several members favoring tapering the money printing operation by mid-year the market took off. Leading the charge was the NASDAQ, but on the Russell 3000 it was the most heavily shorted stocks boosting stock market gains. The Dow and S&P 500 closed at historic highs while the NASDAQ was only able to muster multi-year new highs. We are a ways off from the all-time highs set in the dot com era. Price direction has been spot on here even faced with two slight sell-offs. Stick with the trend and for now it remains up! It is clear the market favors more QE than less. Last Friday’s job report shows this economy just can’t muster enough jobs. Will the QE program work remains to be seen. Again, we have put faith in the Federal Reserve will be able to allocate capital properly to ignite the economy. At least for now a few members within the Fed are keen on curtailing the program. For now our stock market likes it giving us an uptrend to work with and when/how this will end will be something to see. Technology stocks led the way today as seen by the NASDAQ Composite gaining 1.83%. Russell 2000 was right on the NASDAQ’s heels gaining 1.8%. Small cap stocks had been lagging as of late, but finally saw a bit of reprieve from underperformance. The Dow Jones Industrial Average finally lagged as we have seen the Blue Chip index lead over the past few sessions. It is good to see the NASDAQ and Small Cap stocks lead and we’ll like it even more if they continue to stand in front. Earnings season will ramp higher with $JPM and $WFC reporting earnings on Friday. Financial stocks have been the bread winner when it has come to earnings growth for the S&P 500. Bank earnings are particularly difficult due to how much or little the bank decides to release its loan loss reserves. Of course it is a big game and more importantly price will tell us everything we need to know. However, if bank earnings can’t sustain its recent pace the S&P 500 will need to find earnings growth from another group. We continue to operate in an uptrend and cut our laggards as we move forward.

NASDAQ Lags as S&P 500 Ends Flat as Volume Slides; European Woes continue

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.

AAPL rebounds while the Dow breaks Winning Streak

Stocks gain little traction on the day despite AAPL moving more than 4% on the day. BA weighed on the Dow Jones Industrial average as more problems with its 787 plague the company. Volume was lower across the board, but nearly 10% lower on the NASDAQ. Volume continues to be non-existent as the market consolidates. We believe it to be a good thing at this point in time. The last hour of trading saw the major averages pull back from the highs of the session despite GS move after reporting earnings in the morning. Even with BAC moving higher by 2% the XLF could only close with a gain worth a penny. This market continues to work off the overbought conditions keeping our uptrend in place. However, we do need to see this market push into higher territory soon. GS blew the doors off its earnings this morning. JPM missed their revenue mark, but was still able to close one penny off its 52 week highs. Given the action from GS, JPM, and BAC the XLF could only eek out a one penny gain. The ETF still appears to be moving higher and we would expect it to do so if we continue to see new highs from financials. BAC, PNC, and C are set to report earnings Thursday morning and will be the talk of CNBC. The slew of economic data this morning did very little to move the markets very much. Even with the NAHB survey didn’t derail the markets. For the first time in 8 months homebuilder sentiment did not see gains. After 8 months you would think sentiment would calm down and it did. Homebuilding stocks appear to be holding up well despite the lack of good news from sentiment. Do not forget the incredible run these stocks have been on and know your proper exit points. The market still appears to be moving higher with all the moves we are seeing from individual stock names. To protect ourselves from being wrong we have a proper exit strategy and so should you.

Dow Jones Industrial Average Ends Higher for the Fifth Straight Session; AAPL Slide Continues

Big headlines of the day were better than expected retail sales and the slide in AAPL. Going unnoticed was the outside reversal the Russell 2000 index staged. Not going unnoticed was the heavy volume selling in AAPL for the second straight day. The stock continues to see sellers and has now closed under $500 mark for the first time since February 2012. DELL gained for the second straight day taking the sting out of the slide in AAPL as rumors about a possible takeout swirl. Not a bad day for the markets, but outside the Russell 2000 we do not see the major averages pushing to new highs. Whether we are consolidating or not remains to be seen, but the fact we can’t move higher immediately does give us pause. Until we get real sell signals this uptrend still has a chance to push higher. Another big headline of the day was FB news of their new search tool. Lacking the big “wow” factor the stock ended lower on the day. FB has had quite the run and sellers took advantage of the news and sold the stock lower. Does it mean it continues? No one knows and we have yet to see a true sell signal in the stock. We would welcome the stock to pause setup a base and breakout. For now, we’ll see how it progresses over the next few trading sessions. If you are long, make sure you have a game plan on where your exits are. Tomorrow morning we’ll get earnings releases from JPM at 7am and GS at 7:30am. Both stocks have moved out of bases and are higher at the moment. Either stock would not be buyable if they were to gap to the upside. Let’s not forget banks were a big driver for growth in the S&P 500 earnings last year and will be important for the trend to continue for banks. One could think they should have great earnings with the Federal Reserve Bank buying up their mortgage portfolios, but we really do not have a clue. Both stocks will drive the action tomorrow along with volume. How they end up will be key to how the S&P 500 acts. A perfect example of how a breakout should work is XXIA. While the pattern is far from perfect as we can find many flaws the last two days is how we expect stocks to act after running. It is not unwise to take some gains off the table after the monster run. It too has triggered the holding rule of running more than 20% in less than 3 weeks. A strong stock with earnings set to be released on 2/6/13. This uptrend just doesn’t want to die just yet. Look for prices to continue to move higher until we get solid sell signals.

Big Wave Trading Portfolio Update And Top Current Holdings

THE COLUMN BELOW WAS A PREMIUM MEMBERSHIP COLUMN PUBLISHED ON FRIDAY FOR BIG WAVE TRADING MEMBERS. ANALYSIS SPECIFIC TO TRADING POSITIONS HAS BEEN REMOVED. Happy anniversary of the October 19, 1987 crash everyone!! Well, well, well. It sure was an interesting day to say the least. Today’s option expiration was nothing short of exciting as stocks sold off on heavy above-average higher-than-the-day-before volume. Stocks and stock indexes didn’t just sell off, they cratered. The weakness in the Nasdaq and Russell 2000 finally spread over today into the SP 500 and DJIA thrusting all four major indexes into a SELL signal on our market trending model. The Nasdaq and Russell 2000 were currently under a NEUTRAL signal and the SP 500 and DJIA were under a BUY signal but today’s sell off was confirmed everyone thus switching everything into a SELL. It doesn’t matter where you look. The indexes, futures, the options chain, ETFs, or inverse ETFs. Wherever you look, volume exploded higher. What didn’t explode higher but finally moved was VIX. VIX has finally begun moving in the direction those of us at Big Wave Trading believed it should have started moving in on 9/25. While the move came on convincing volume, and the CBOE reported the highest weekly trading volume ever in VIX futures, a BUY signal was not triggered in VXX/UVXY/TVIX. [MEMBERS CONTENT ONLY]. [MEMBERS CONTENT ONLY]. Getting back to the overall market, it was the fifth time this year that the Nasdaq has closed lower for the week on above average 50-week volume. As just mentioned, this now makes it five times that this has happened versus 0 times the Nasdaq has closed higher on above average 50-week volume. 5 – 0. For the year, the NYSE is actually up 1 vs. 0 times down. But the NYSE is not where you find your dynamic exciting technology based growth stocks. Those are found on the Nasdaq and Russell 2000. When you consider the volume pattern of the Nasdaq and then take a look at the recent slope of the Relative Strength line of the Nasdaq and Russell 2000 compared to the SP 500 you can see that we have a potential problem brewing here. The Relative Strength line of the Nasdaq is simply imploding here nearing the December 2011 levels. Meanwhile, price is nowhere near those lows. If this trend continues, watch out! The Nasdaq and Russell 2000, in healthy uptrends, lead the market. The Nasdaq and Russell 2000 start to lag the NYSE when a rally is on its last legs. The Nasdaq and Russell 2000 lead the market down when a downtrend is starting in the stock market. What stage are we in now? You are correct. This obviously means that now is the time to be cautious. This is especially the case when you look at the recent action in AAPL, GOOG, AMZN, PCLN, and LULU. After taking a look at those, take a look at the big giant bellweathers like IBM, INTC, MSFT, SBUX, MCD, and GE. Notice the same bearish action? Then take a look at your leading biotech stocks like ALXN, BIIB, VRTX, and PCYC. Is there anything surviving? Of course. The bank stocks like GS, BAC, and JPM are acting like there is nothing wrong and of course for the master criminals that run these banks and the USA there is not. On top of that, they need to make sure real estate prices go up so that all their real estate holdings continue to make them wealthier and wealthier (If these sociopaths CREATED their own businesses this would not be a problem. They didn’t.) on the backs of the middle class. On that note the XHB is fine. HOV, TOL, PHM, BZH, MTH, MHO, LEN, KBH, etc. all look like they were completely oblivious to the carnage gripping the market today. If you see the big banks (KBE) and home builders (XHB) start to roll over, then you can be sure this uptrend is finished. To me, it already is, as I follow the Nasdaq/Russell 2000 as market leaders. However, if these stocks continue to rally, show no damage, and we begin to find a floor to this selling, I would expect that the uptrend could definitely continue. I mean, it is a Fed based QE driven stock market. When stocks sell off, they step up to make sure their jobs are safe for now. I am sure one day this will stop working. Until then, the theme don’t fight the fed still rings loud and true. No one can predict the future in the stock market. I will not try to either. While it looks like we are about to crack wide open, we could easily find support and rally higher on no volume. Hell, we did it in 2009, we did it in 2010, we did it in 2011, and we did it earlier this year in 2012. Why not a fifth time? [MEMBERS CONTENT ONLY]. [MEMBERS CONTENT ONLY]. It looks ugly but it has looked ugly before. Let’s see what happens next week. Have a great weekend everyone. Aloha. [MEMBERS CONTENT ONLY]. Top Current Holdings – Percent Gain – Date of Signal AVD long – 139% – 1/10/12 NTE long – 62% – 8/17/12 CAMP long – 59% – 4/26/12 CLGX long – 52% – 6/19/12 SVNT long – 44% – 9/10/12 VRNM short – 39% – 4/10/12 CSU long – 32% – 9/4/12 MAGS short – 31% – 4/18/12 SHF long – 28% – 8/1/12 ASTM short – 26% – 7/17/12 HEB short – 25% – 9/24/12

NASDAQ Breaks Six Day Losing Streak; C Jumps more than 5% on Earnings

The market finally bounces from oversold conditions as volume ends mixed. Volume rose on the NYSE and NASDAQ exchanges, but SPY and QQQ volume remained light. Retail sales jumped more than expected helping set the tone early on. Sellers got the upper hand on the NASDAQ, but were quickly turned away as stocks zoomed higher into the close. Price gains were solid and although we did not see the overwhelming volume associated with institutions supporting the market. Today was day one of a new attempted rally on the NASDAQ lead by banks. Banks lead the market today on the back of Citbank’s earnings with the stock gaining 5.5% during the market session. WFC continues to suffer from its earnings report, but other big banks continue to act well ahead of earnings. GS, BAC, and JPM continue to act well and are poised to move higher. When the Federal Reserve will be buying mortgage securities from Banks it is hard to fathom the Federal Reserve will pay anything but the highest price possible. So far, the only group to benefit from QE Forever will be the big money center banks selling mortgage securities back to the Federal Reserve. We were bound to bounce from the selling we saw from last week. The NASDAQ was down 6 days straight and it is quite normal to see the market rebound. There is no way to know whether or not this will turn into a new uptrend or a one day wonder. We’ll need to see confirmation of a move higher before we get excited over one day’s action. We remain in neutral mode and until price action and leading stocks say anything different we’ll remain neutral. There is just 22 days left to the election is over and it cannot come soon enough. As soon as the election ends the fiscal cliff topic will be one in focus and one the market will grapple with and hopefully produce a trend. Today concluded day one of an attempted rally and we’ll be waiting for confirmation one way or another.

NASDAQ 100 Carries the Market Higher Despite Disappointing Manufacturing Data and Jobless Claims

Economic news was not good this morning, with the Philly Fed showing manufacturing contracting and jobless claims contracting much more than expected. Initially the market did sell off on the news but buyers jumped back into the market pushing the NASDAQ back to intraday highs just after noon time. Early afternoon selling, once again, was met by buyers as this market appears it just can’t go down. Regardless of the reason we continue to see support rush into the market any time sellers get a leg up. A few financials were struggling, but overall the market remains in an uptrend and we’ll continue to act accordingly. A surprise out of the AAII investor survey was it showing the number of bears jumping above 40%! Those who are bullish fell to 22% and it is surprising considering the move in stocks since JPM issued earnings. Sentiment is not something you would want to trade off of, but it is interesting where folks are at with this market. Perhaps it shows people are bearish and feel the Federal Reserve will save the market. The big boy financials certainly aren’t following up gains from earnings. MS reported this morning and the stock has been getting hammered. BAC, JPM, and GS continue to act very weak! Technology stocks are certainly in favor with EBAY, QCOR, and SNDK earnings. Last week it was JPM who got the party started with its earnings release and we have seen very little follow-through. We’ll stand pat with our rules-based investing and leave the guess work to others. Lagging the broader market in a significant way were Small Cap stocks. The Russell 2000 fell .36% today, while the NASDAQ jumped .79%. Even though the NASDAQ backed off its highs of the day, the index put in a solid day, unlike small cap stocks. It is unfortunate, but investors are just not favoring small cap stocks for whatever reason. Perhaps the Bernanke put is only dividend yielding stocks? It is anyone’s guess and for now small cap stocks as a group are not moving and we’ll latch onto the stocks that are moving. Just another day in paradise! Cut your losses and let your winners ride! Have a great weekend.

Stocks Add to Tuesday’s Gains as Volume Ends Higher

For the second straight day, Ben Bernanke testified in front of the house and stocks pushed higher. Housing data was a bit better than expected, aside from building permits. However, a few home building stocks like HOV and PHM did not agree. INTC lead the semi-conducting stocks and the rest of the technology sector higher. NASDAQ led the major indexes higher with solid gains, but off the highs of the session. We continue to be in rally mode and have witnessed a solid back to back days of gains. Despite potential headwinds facing this market and it being the summer time, we have quite the potential to run further. This might change tomorrow or Friday, but for now we are in rally mode. If we are wrong we simply use our rules to exit our positions and move forward. No guess work here and we certainly aren’t going to act upon any emotion. Know where your exits are both for losers and know when to exit your winners. Banks were looking pretty good, but earnings from BAC disappointed the market as the stock sold off in heavy trade today. GS and JPM both look weak here and after enjoying nice gains from JPM’s earnings release last Friday we have seen a lack of follow-through from many of the banks. BBCN and WTFC bank stocks we have liked continue to do well, but it is the big boys weighing on the entire sector. As we progress we’ll continue to look to see where our exits are and potential entries and go from there. We’d rather to see financials continue to lead the market as they tend to be the first group out of the gate during a rally. Where this market goes is anyone’s guess! For now we have a trend to push higher and until we get signaled otherwise it is the long side we go. Cut your losses and ride your winners.