Industrials hit more Highs but Volume Drops again

For the 7th straight day the Dow Jones Industrial Average closed higher. Volume fell across the board, but this is normal for this uptrend and Mondays. VIX fell to new lows as buyers continue to show extreme complacency. AAPL reversed off its lows in the afternoon pushing the NASDAQ to new highs on rumors of a “plan” for their cash. The stock is so beaten up any rumor will force shorts to flee for the hills. The Yen and Pound continued their declines as both currencies appear to be racing towards zero. Although it appears the Yen will likely win this race. We aren’t surprised by new highs and we’ll continue to operate on the long side of the market. There weren’t too many negative signs in the market other than the extreme light volume. NYSE volume was extremely low and you have to wonder where the institutions are. Where did they go? KORS a leading stock dropped below its 50 day in high turnover. The stock has continued to struggle after reporting earnings. SLCA issued a secondary after the bell and this leading stock will need to prove it can absorb the excess supply. The Fed’s money printing has seemingly put a floor in the stock market and any downside will be limited. However, we know better and we will continue to work our process. Wednesday is a big day for the markets as we get a reading on February advance retail sales. Many have made a big deal over the pay roll tax increases. WMT stock price has ignored the internal memos regarding sales. TGT has broken into new highs despite consumers having to deal with higher taxes. It will be most interesting to see how the market reacts to the release. Friday’s job report was finally a good sign, but we’ll need to continue to see jobs created a large pace. Unfortunately with the Federal Reserve printing $85 billion a month and continuing ZIRP. At some point either the Fed or the market will stop QE and ZIRP. We need a healthy economy without endless money printing.

The Market Hits Stall Speed as the market Digests the State of the Union

Stocks enjoyed buying through the early morning session as Europe rebounded from its recent pullback. By 10:30 the market changed behavior as it simply could not maintain its high of the day. Thirty minutes prior to the European close the market took a nose dive and hit the lows of the session. Volume was running higher throughout the session and indicating the market had begun hitting stall speed. A late day push from CSCO and AAPL assisted the market lifting from the lows of the session, but the Dow Jones Industrial Average did not escape a day of distribution. Tough to call a stall day on the NASDAQ, but for back to back days the index has been unable to hold the highs of the day. The market is having a tough time with the highs up here. We remain in an uptrend and while there are subtle signs of cracks we haven’t had an all out sell signal. CSCO reported earnings after the bell and they beat their numbers. However, the initial pop the stock enjoyed was short lived with the stock pulling back. The stock has been on a heck of a run since November contributing to the success of the NASDAQ. Given the action now it appears all is well with the stock, but tomorrow is a new day and anything is possible. If you are long the stock, just know where your exit is. It appears the past few sessions earnings have not been kind to the majority of stocks. PRLB is an exception after earnings. The stock blasted higher with volume to boot. A very good sign for those who are long the stock. PCYC was another earnings winner. CMCSA started the day off right, but like the market was unable to sustain the high. The loss of the day came from a growth stock RAX. RAX clearly disappointed the street as the stock fell hard in massive trade. This is not what you want to see out of a growth name. BWLD was another loser on the day. Earnings season has created quite the volatility in stock movements. INVN and KORS continued their slumps. There are positive and negatives to the current market rally. Everyone and their mother are expecting a pullback. When and how this market correction unfolds is anyone’s guess. It is tough to really say we have hit a market top without major distribution following these stall days. Know your exits and wait for your price signals to hit.

NASDAQ Stalls as Volume Finishes Higher

NASDAQ Composite continues to lag behind the Dow Jones Industrial Average and the S&P 500. Volume rose across the board, but remained below average. The NASDAQ notched a stall day and although it failed to register a day of distribution. Stalling days are nothing new and all it will take is for the NASDAQ to eclipse today’s high. Two star industries on the day were XLF and XHB as both groups appear to be ready to run higher again potentially in a blow off move. End of day action took the market off its highs, but the S&P 500 and Dow were able to escape too much damage. AAPL weighed on the NASDAQ once again as the stock continues to prove it is a laggard. One question would be is the stock the canary in the coal mine? There is no question AAPL’s products are great, but is the action in the stock foreshadowing something in the overall market? Or is it simply a laggard stock and should be completely ignored? Time will tell where this stock will end up. However, we know the stock is in a downtrend and is all we need to know. Wednesday we’ll see the market react to the State of the Union. President Obama’s speech is pretty much known as he will revert to ideas he trumped on the campaign trail. More taxes and more spending (disguised as “investments”) will be proposed. The President has a way of delivering a great speech and this should not be any different. Democrats will praise the president while Republicans will detest it. After the speech all eyes in the political world will pay attention to the Sequester on March 1st. A few disappoints in earnings this morning with KORS and INVN reversing gains. While KORS was a viable gap its inability to hold onto its opening price certainly puts a blemish on the stock. INVN was just terrible. In the after-hours session we had a few leading stocks have a tough time. RAX for one has been a stalwart for this market. Unfortunately, the stock fell 10% in the after-hours session. PCYC a thin name jumped 2% after reporting earnings. A stock to watch for a potential gap move at tomorrow’s open. NTGR and BWLD were on the negative side as well with both stocks falling hard. Not a pretty picture for the majority of earnings with only a few bright spots this afternoon. Regardless of your opinion of the market we remain in an uptrend. This may or may not change tomorrow, but if it does we are prepared.

S&P 500 Ends Win Streak as VIX Rises; Some Leaders Stumble

Small losses on the S&P 500 and Dow ended their win streaks as AAPL boosts the NASDAQ to close in the green. Durable goods orders were boosted by BA orders coming in better than expected. Disappointing pending home sales were blamed on low supply, but nonetheless there weren’t as many pending home sales as expected. The VIX was able to hold its mid-point despite the market getting support at the lows. There were a few troubling signs with 3D printers facing heavy volume selling. Recent long signals haven’t been working as well suggesting we may be in for the market to take a rest. Our uptrend is still intact, but we do have a few warning signs of a possible pause in the market rally. DDD and SSYS faced big losses today as these stocks have moved quite a bit from the 11/16 low in the market. It doesn’t matter if these stocks are the way of the future, for now the heavy volume selling suggests these stocks have further to correct. Today’s action is why we have our exit rules with our stocks. Outside of these stocks we don’t see too many trouble signs other than a few new longs not working immediately. KORS another leading stock had trouble today, but LNKD had no issues breaking out. It is very possible we are rotating into new names and this market will resume closing at highs by week’s end. Stay disciplined. Tomorrow we’ll get the Case-Shiller index regarding the housing market. The index has shown much improvement since the utter disaster back in 2008 and 2009. However, it will be Wednesday when we get a reading on fourth quarter GDP growth as well as the FOMC rate decision. Federal Reserve days tend to be positive for stocks and Wednesday shouldn’t be any different. Of course we’ll allow our signals guide us via price, but the reaction to the comments by the Fed should be entertaining. We aren’t about to call a market top or even a correction, but given the extreme sentiment readings last week and a few leaders getting hit the probability of a correction is greater. Stick to your game plan and execute. Short-Term trends: TICKER ST TREND TREND CHANGE DATE CLOSE % SPY UPTREND NO CHANGE 1/28/2013 150.07 -0.12% IWM UPTREND NO CHANGE 1/28/2013 90.00 0.07% QQQ UPTREND NO CHANGE 1/28/2013 67.15 0.22% USO UPTREND NO CHANGE 1/28/2013 34.94 0.46% UNG UPTREND NO CHANGE 1/28/2013 18.55 -4.97% GLD UPTREND NO CHANGE 1/28/2013 160.29 -0.22% SLV UPTREND NO CHANGE 1/28/2013 29.85 -1.19% DBC UPTREND NO CHANGE 1/28/2013 28.00 -0.04% FXY DOWNTREND NO CHANGE 1/28/2013 107.97 0.14% FXE UPTREND NO CHANGE 1/28/2013 133.5 -0.03% TLT UPTREND NO CHANGE 1/28/2013 118.03 -0.36%

VIX Jumps 10% as Stocks Pullback in Light Trade

Small caps were able to close in the green, but the major indices were unable to hold their early morning gains. At the end of the day there were some fireworks with sellers showing up and pushing the Dow, S&P 500, and the NASDAQ to the lows of the session. Perhaps the lighter volume on the day allowed sellers to have their way. Overall, a pullback on lighter volume is a good thing for this current uptrend. We’d rather not see the Dow fall 100 points. If we were seeing heavy volume selling we’d be concerned with distribution piling up and additional small caps were relatively unharmed during the late day sell off. One thing to note was the more than 11% move in the VIX showing a bit of fear coming into the market. Today was not a terrible day for the markets as it continues to keep us on our toes. The market simply cannot go higher in a straight line and pullbacks are to be expected. In our new world of forever QE it does give us pause when we can fall with relatively ease. We have moved quite a bit since last Friday and a pullback is to be expected. At the moment, it appears sellers did not bring volume to the table, but any further big price selling will concern us. It was nice to see the continued leadership from Small Cap stocks as well as the NASDAQ outperforming the S&P 500. We could have done without the end of day shenanigans. The VIX has been relatively tame since the November turn around on 11/16. We have not seen the fear index above 20 since June of this year. We do have quadruple witching this Friday as well as GDP set to be reported tomorrow morning. Quadruple witching weeks tend to see a big jump in volume as well as volatility. Without distribution piling up it is tough at this point to say today was a turning point for this market rally. Some signs of concern like ISRG getting obliterated by a Citron report and HLF getting hit by Ackman, but overall action was “okay.” A few stocks like KORS ended well off their highs, but this is normal for our current environment. However, any further weakness in leadership will be concerning as for now we are cautiously long. Tomorrow morning we’ll get our weekly jobless claims as well as 3rd quarter GDP expected to print 2.8% growth. Sadly, this is mostly due to government spending borrowed dollars. Again, price will be everything. Know your exits.

The Dow Edges Higher as Broader Market Consolidates Again

Turnaround Tuesday didn’t quite work out, but for the second straight day the market puts in an excellent day of consolidation. The past two days have certainly done enough to work off overbought conditions in the near-term. Volume inched higher on the NYSE and roughly 15% higher according to preliminary stats from IBD. Monday’s volume was so light that it didn’t take much for volume to creep higher. All in all another solid day for the overall market as our uptrend continues to stay intact. A few retail stocks took it on the chin today, but all in all leading stocks held up relatively well. KORS and ROST look weak and with KORS secondary pricing soon it appears the stock wants to continue to head lower. ROST on the other hand remains below its 50 day as traders sold the stock today. The stock has been on quite a run since last August and is now looking tired. A quick observation here is QE3 will not help out retail stocks. Why? Who cares, price action in leading retail stocks shows investors are looking elsewhere. Given the back to back consolidation days we need this market to resume moving higher. At the very least leading stocks need to get going with or without the market. We have escaped distribution, but we can’t consolidate gains forever! It is important not to get impatient with the market and allow your stocks to work. But, at some point we need to keep our money moving and stocks that are not moving do not belong in our portfolio. Keep in the game! We have plenty of opportunities with this market and if you give up or “take a break” you may miss a golden opportunity. I don’t like missing out on gains and if you do it makes it infinitely more difficult to capture superior gains. Cut those losses short.

Volume Slips Despite the Market Finding Support at Session Lows; CSCO Soars in After-Hours Trade

Led by a solid rally from the Russell 2000, stocks found support more than once throughout the day. New home builder confidence was better than expected again as consumer prices were below expectations according to government figures. Unfortunately, the economic figures didn’t spark any sort of excitement among institutions. Volume was lower on the day and certainly a black mark on the day, but it was the fact the market was unable to eclipse yesterday’s high that is somewhat concerning. We’ll need to see the market build off today’s gains and have volume flood the market. Not a terrible day by any stretch, it simply just left us wanting a bit more from the market. In the after-hours session CSCO provided the market with some good news as the stock beat earnings and boosted its dividend. John Chambers is notorious for speaking what he sees (despite seeing a great economy at the end of 2007) and this time his comments weren’t as bad as they were in March. If you remember back in March CSCO’s earnings provided a downside catalyst with its negative view of the economy. This time around it doesn’t appear to be all that bad according to CSCO. The stock is trading more than 80 cents higher in after-hours session. Friday we’ll get the dreaded monthly options expiry. Volatility did pick up yesterday, but still remains relatively tame. Option expiry weeks are notorious for increasing intraday swings and volume in the market. Thus far, we have not seen either. Perhaps tomorrow will be a different day, but nothing is guaranteed. Earnings plays like KORS, FLT, and others have provided some good solid profits for those taking advantage of the morning gaps. Tomorrow we’ll get PRGO and ROST reporting earnings and tonight NTES will report. We’ll be paying close attention to these stocks as they open tomorrow and will take advantage if the opportunity presents itself. Another interesting point to continue to look at is the sell-off in bonds. TLT and TBT are two ETFs to watch but the 10 year has gone from 1.4% to 1.8% in a short time. That is one big move in bonds recently and it will be interesting to see how mutual fund flows react to rising yields. Remember, rising yields are well correlated with stock market returns. Keep an eye on yields. Now that hump day is over we’ll be looking forward to another fun summer weekend.

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading market model went through a serious of changes this week turning from a full BUY signal to a cautious BUY signal to a NEUTRAL signal by Thursday. This NEUTRAL signal means that there is no statistical edge one way or the other as measured by all of our internal indicators. While under a NEUTRAL signal, BWT will only go long the highest quality leading stocks with the strongest chart patterns, will operate from the short side on the best topping patterns, and will eliminate all losers immediately. This means that if we go long or short a stock and it does not move in our favor on day one we are out some of it to all of it. Even if that loss is only $1. No questions asked. It is still not a stock pickers market. That is, of course, you are long PCLN CMG or AAPL. If that is the case then it is a stock pickers market. If the action in these leading stocks doesn’t confirm the mantra “focus on the leaders” I do not know what does. One particularly scary aspect of this recent rally is the drawdown in the BWT accounts from mid-February to Friday. BWT was working on some solid gains when all of a sudden March hit. March has given quite a few long signals in high quality leading stocks that have led to consistently cutting losses. This isn’t happening every once in a while. It is happening on virtually every trade since mid-February. This pattern is following the same pattern of January 2011-May 2011 where the methodology we use diverged very negatively from the overall market. For the bulls sake, we can only hope this is not going to end up in a repeat of that year. The truth of the matter is that March was brutal for Big Wave Trading. In fact, it was a shocker. Watching large gains slip away (just like the gains from September 2010 to January 2011 being destroyed from Jan 11 to May 11) is always a humbling experience. Yet it is also a chance to learn and grow. And that is what we have done. It is clear the market model timing methodology is far superior to stock picking currently. Due to this, more capital will be put to work on the model signals than before. Also, playing speculative stocks with unsustainable run-ups and criminal pump-and-dumps on the short side will become a bigger player in our portfolios. Stock picking using the chart patterns that helped create vast wealth from 1996-2000, 2003-2007, somewhat in 2009, and in late-2010 for me will come back in fashion. However, right now, clearly, it is not in style. during any other rally in the past the top percent gainers below would be nearly doubled. Outside of three stocks, the returns have been paltry. As long as this methodology remains out of style, our portfolios will adjust accordingly. I hope everyone is enjoying their long weekend. Aloha.

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

SWHC – 84% – 1/3/12
KORS – 69% – 1/17/12
AVD – 65% – 1/10/12
RF – 42% – 1/5/12
BVSN short – 40% – 3/16/12
EPAM – 39% – 3/1/12
LQDT – 36% – 2/1/12
LNKD – 34% – 1/19/12
PRXI short – 31% – 3/30/12

Big Wave Trading Portfolio Update And Top Current Holdings

The biggest cause of trouble in the world today is that the stupid people are so sure about things and the intelligent folks are so full of doubts. — Bertrand Russell

It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change. — Charles Darwin

The Big Wave Trading portfolio remains under a BUY signal.

There are concerns with the current condition of the rally but nothing internally is moving our model away from the BUY signal. The most problematic issue is that new longs are simply not performing well. New longs continue to give us small cut losses or small gains. The only two areas not doing this are our IPO and Medical/Biomed/Drug stocks. They remain a high reward/risk win/loss ratio play. This has been one of the strangest uptrends we have seen at Big Wave Trading since my career started in 1996.

For the first time ever, during an uptrend longer than three months, the Big Wave Trading portfolio is lagging the overall stock market. This is more than likely due to the slow steady nature of this uptrend, the lack of volatility, and the lack of explosive moves on explosive volume. Big Wave Trading normally will purchase 5-20% of the strongest CANSLIM quality stocks with the best chart patterns in the stock market, when an uptrend is strong. When we make these purchases and they show low reward/risk win/loss ratios we reduce position size and spread out into more speculative names with higher quality chart patterns to reduce risk. These stocks are not performing like they have in the past. Past rallies from 1996-2000, 2003-2007, 2009, and late 2010 were extremely profitable using this methodology (see Past Big Winners on this website). During this current uptrend, that is not the case.

Our market model methodology using the TQQQ long and short is crushing our current returns with a YTD gain of 33% (without the March shakeout gains would be 60%). This methodology continues to be superior to our stock picking ability ever since the 2011 top. Eventually, our stock picking methodology will come back into favor. For now, however, it is clear that using the 3x ETFs is where the majority of our capital should be deployed.

If the market refuses to selloff this year, we expect that a potential large rally may be around the corner. If that rally comes, just like in most longer-term uptrends, the large gains in individual stocks should follow. Following the 1998, 2002, and 2009 lows, this was the case. We do not expect an explosive uptrend to begin here, though we realize it could, due to the Nasdaq price being so far extended from the 200 day moving average. It would be very beneficial to the market for the price to continue to work its way lower and consolidate so that the 50 and 200 day moving average can tighten up to the price. As long as we remain extended, a risk of a pullback remains very high.

We continue to hedge our long side positions with shorts in speculative stocks with no earnings/sales growth or paid promotional manipulation pump-and-dump stocks that have made extended/parabolic moves in short periods of time. When these stocks reverse hard off their extended runs on huge volume, we take short positions. So while Big Wave Trading remains under a BUY signal we clearly recognize the fact the VIX is low, sentiment is too bullish on the Investors Intelligence survey, and the price and 200 DMA of the Nasdaq are too wide for a significant move up here.

As always, we are ready for anything and everything that the stock market can and will produce. It is the only way to play the game. The most important rule remains to always cut losses immediately when we are wrong. Big Wave Trading never holds a losing position. If Big Wave Trading purchases a stock or ETF and it does not move in our direction immediately we begin to scale out or get out immediately. No questions asked. It either works or it is removed.

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

SWHC – 72% – 1/3/12
KORS – 66% – 1/17/12
AVD – 50% – 1/10/12
RF – 45% – 1/5/12
LNKD – 37% – 1/19/12
BVSN (short) – 36% – 3/16/12
EPAM – 36% – 3/1/12
LHCG – 32% – 1/19/12
CIS – 29% – 3/12/12
CCU – 28% – 12/21/11
SUNH – 26% – 3/9/12
CERS – 25% – 2/10/12

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

Volume slides NASDAQ erases losses

The market avoided a day of distribution despite early morning losses. A negative housing report soured the morning mood as sellers dominated the morning trade. Buying kicked in just afternoon time as upside volume begin to emerge. The end of day action wasn’t ideal as a slight pull back from the day’s highs was a bit disappointing. However, the support at the lows is something unmistakable as this uptrend continues to prove to be unstoppable.

At some point, yes this uptrend will cease and we’ll get a correction. No one can predict when we’ll get a correction. Distribution count on the S&P 500 is 4 and the NASDAQ sits at just 2. While the S&P 500 distribution count nears an area of concern the NASDAQ remains in the clear. Of course further selling on volume would change this, but we’ll wait and see.

AAPL was a big part of the market’s rise from the bottom. Early morning sellers were eager to take down the stock after it closed above $600 for the first time. Closing near the session highs on above average volume was a clear sign institutions stepped in and supported the stock. One thing to note, the stock closed again at another all-time high. Tough to be bearish on the stock right now, unless of course you like to pick tops and in this case you have been wrong quite often.

Another big winner on the day and for BWT members was KORS. KORS had a bit of trouble during mid-day, but buyers jumped in and pushed the stock higher closing just below its high of the day. The company raised its guidance and the market rewarded accordingly. KORS a recent IPO, continues to show strength and is a staple of the BWT portfolio.

In earnings news, ORCL posted better than expected earnings. The stock rose 1.5% at the close of the after-hours session. The stock was up more than 3% during the after-hours session, but was unable to hold onto its gains.

This uptrend remains tricky and will continue to frustrate investors. Stick to a disciplined approach and BWT. Cut those losses short.

Big Wave Trading Portfolio Update And Top Current Holdings

“The whole secret to winning and losing in the stock market is to lose the least amount possible when you’re not right.” — William J. O’Neil

“It is when the unimaginable occurs that the systematic trader remains calm, presciently knowing when to buy, sell, or adjust their exposure.” — Mark Abraham, Quantitative Capital Management, L.P.

Following last weeks switch from BUY to NEUTRAL to partial SELL to NEUTRAL, the Big Wave Trading Portfolio switched back to a full BUY signal on Tuesday. New longs leading up to Tuesday and new longs following Tuesday continue to act very well indicating that the rally has a high chance of continuing on the short term. The most unfortunate part of this entire uptrend has been, once again (as has been the case following 2008), the lack of new long positions immediately exploding and producing 20% gains within 2 weeks or 50%+ gains in 2 months. The lack of huge upside moves in individual stocks continues and does not appear to be in any hurry to change in the new QE environment we find ourselves in. Chart patterns that produced explosive gains from 1982-2007 simply do not produce the same huge moves (study my past big winners from 1998-2008 to see the evidence). This remains the one unfortunate problem with the new uptrend. The good news, however, this year, is that individual stocks move less with the overall market and finally have a mind of their own. It appears, during this uptrend, forcing yourself to be long leveraged index ETFs is not the only way to make money for the first time since the 2009 uptrend started. Overall, there was not much action out there following the BUY signal and that is an overall positive. It would have been much better to follow-through on the gains immediately but the indexes across the board are a bit extended away from their 200 day moving averages and history tells us huge moves are not going to happen when the indexes are around 10% higher than their 200 DMA. Some sideways consolidation would be a very bullish situation here. Especially with the upcoming Facebook (FB) IPO. A black swan event could happen at any moment so we continue to be completely ready for the uptrend to end at any day. Picking a date, however, would be foolish. We will let the price action of the indexes tell us when the uptrend is over, instead of our flawed egos. Have a great weekend everyone. Aloha.

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

KORS – 64% – 1/17/12
SWHC – 50% – 1/3/12
RF – 41% – 1/5/12
LHCG – 40% – 1/19/12
AVD – 38% – 1/10/12
CERS – 28% – 2/10/12
CRMT – 26% – 11/30/11
SUNH – 25% – 3/9/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading market model switched from a BUY signal to a NEUTRAL signal following Wednesday’s stock market session. The switch from the BUY signal which was triggered on 1/5 to a NEUTRAL signal on 2/29 was caused by a few key factors this past week. 1. New longs have not moved higher immediately leaving most with full cut losses. 2. Current holdings are giving off partial profit taking to full profit taking signals. 3. One key technical indicator called Time Segment Volume continues to show huge negative divergences on the Russell 2000, Nasdaq, and SP 600. 4. The Russell 2000 led the rally from the October reversal higher and therefore should, as history suggest, lead the market lower. This being said, we are well aware that a lot of our current holdings continue to have very strong technical price and volume patterns (Big Wave Trading portfolios remain anywhere from 55%-75% currently invested). On top of this, there are plenty of stocks out there building bases that also sport fantastic fundamentals. Fusion-io (FIO) and Questcor (QCOR) are two great examples. Even further more, we have the beloved Facebook (FB) IPO coming up sometime in the very near future. If the market reverses higher here on higher above average volume with the indexes putting in a convincing 1%+ move, you can be sure our market model will return to a full BUY signal. If selling continues to pick up and leading stocks like Priceline (PCLN), Apple (AAPL), and Mastercard (MA) breakdown, the market model will switch to a SELL signal. For now, we remain in NEUTRAL, and that means that we invest less capital in new longs, we go short great short setups (not good setups), and we are even quicker to take our losses than we are in a trending market. Cutting losses extremely quick, when wrong, remains disciplined rule #1 at Big Wave Trading.

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

KORS – 70% – 1/17/12
IRE – 49% – 1/17/12
RENN – 47% – 1/11/12
YINN – 43% – 1/5/12
LHCG – 32% – 1/19/12
FAS – 31% – 1/5/12
UMDD – 31% – 1/5/12
RF – 31% – 1/5/12