Big Wave Trading Portfolio Update And Top Current Holdings

“The less I cared about whether or not I was wrong, the clearer things became, making it much easier to move in and out of positions, cutting my losses short to make myself mentally available to take the next opportunity.” – Mark Douglas “Obviously you don’t want to overhaul a program in response to one year just because something didn’t work. That’s when you’re almost guaranteed that it would have worked the next year had you kept it in there. –James Klingler, Eclipse Capital, MAR, April 2002, Issue No. 278″ The Big Wave Trading model remains under a NEUTRAL signal. As it stands, the model will either switch to a BUY signal with a move above the 50 day moving average on above average volume (a low average volume move would not trigger it) or a SELL signal with a break below the 200 day moving average. The new BUY signal would be very weak and will have us only deploying small amounts of capital in 1x ETFs and select high-quality high-priced stocks. The only way any BUY signal will move the accounts into going 200% all-in would be a move of 2%+ on volume 25% higher than average on the Nasdaq or Russell 2000 with many dynamic leading high-quality stocks making strong moves on large volume. Unless there is massive volume in the market and stocks, we are not interested in going heavily long here. That is, of course, unless, we get another round of Quantitative Easing. If that is the case, the market is going to lift higher, and we will not stand in its way. We will join the melt-up by getting long 1x ETFs and following other high-price high-quality stocks higher but we will avoid margin. Before we even think of using any margin, like I said, we are going to need to see volume and green charts everywhere. These normally come only after a large correction has hit the market. We have not had a large correction for 3+ years. Every time we try to start a real correction to reset conditions so that new growth can come, we have the Fed intervene in all its glorious wisdom. Now, if we fail here and breakdown below the 200 day moving average on volume, I will go long 3x inverse ETFs in my IRA and will adjust the size to the strength and conviction of the breakdown. If we selloff on low volume, our model will take small 3x inverse ETF long positions. The risk accounts will continue to trade any and all breakdowns in individual stocks that have either rallied 300% or more from the 2009-now QE-fueled uptrend and/or stocks that are breaking down or reversing on strong volume that have no earnings and no sales growth. For now, it is NEUTRAL time, heading into the Greek elections. It does appear the market wants to move up here but as we have seen for 1 1/2 years now what we think should happen continuously doesn’t. One final note. Big Wave Trading never holds losers. If we take a position in a stock/ETF and it does not move in our direction immediately, we begin reducing our position. Losses are never tolerated. They are eliminated immediately when our idea is proven incorrect. Top Current Holdings – Percent Return – Date of Signal AVD – 80% – 1/10/12 BVSN short – 73% – 3/19/12 LQDT – 56% – 2/1/12 MNST – 56% – 1/13/12 MAGS short – 34% – 4/18/12 CAMP – 32% – 4/26/12 VRNM short – 30% – 4/10/12 SINO short- 30% – 4/12/12 PRXI short – 26% – 3/30/12 PHMD short – 25% – 5/11/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading portfolios switched from a SELL to NEUTRAL signal intraday on 6/6/12 as the Nasdaq rose 1.5%+. The heavier volume selling was drying up before the switch and we warned that a switch was coming last week. That indeed was the case this week. If the next switch of the model is to SELL, this second confirming SELL signal (confirming because the most recent SELL signal was profitable with a 3% gain on QQQ short) will be a strong signal and we will be increasing our short positions accordingly. As of now, Big Wave Trading is very heavy cash. If any new BUY signal comes without volume confirmation it will be a very weak signal and trading will be initiated accordingly. Our model, following all the recent distribution the past three months will not have a strong BUY signal until the market averages can produce a 2%+ gain on volume 25% above the 50 day volume average. Leading stocks via Relative Strength and EPS/sales growth must also confirm the move. It is summer time and we warned investors that it would be choppy and consist of lower volume. The only meaningful move we expect is a move to the downside, if a move does occur. During the past twenty years only one Follow-Through day has led to a rip roaring bull market–twenty years ago in 1992. During the past 12 years only two BUY signals during the summer have generated any meaningful gains– in 2000 in leading stocks and 2009 with the market model/leading stocks. The data is what it is. Price is our ultimate tell and we will invest accordingly. Volume is our guide as to how much capital we will use when price produces a signal. We continue to keep our trades small until the next perfect setup occurs. On the long side, there has not been one since SLXP setup in March (it failed that setup) and the last successful one was LQDT on 2/1/12. On the short side there has not been one since BVSN in early March and PRXI in late March. The most important rule right now is cutting our losses short. If we take a position and it does not move in our favor immediately, in this tape, we begin selling until the final cut loss is hit. We are not playing games in this tape. Cash is king, as of this moment right now. By Monday, it could be completely different. However, the chances of that happening is very slim. Aloha and have a great weekend everyone. Top Current Holdings – Percent Return – Date of Purchase LQDT – 76% – 2/1/12 BVSN short – 76% – 3/16/12 AVD – 74% – 1/10/12 MNST – 51% – 1/13/12 VRNM short – 36% – 4/10/12 PHMD short – 34% – 5/11/12 MAGS short – 34% – 4/18/12 PRXI short – 29% – 3/30/12 SINO short – 29% – 4/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading portfolios remain under a SELL signal generated on 5/4/12. The current market environment continues to weaken as stocks among all sectors (even defensive–outside of gold) are breaking down. The BWT portfolios will continue to work the short side (long side with Gold) until a real uptrend returns. We do not expect an uptrend to return to the stock market until at least October. While we are short, we understand that the crowd is already getting scared and this could produce a bounce back to the 50 day moving average. Even if this does occur the BWT system model will not be switching to a BUY signal until accumulation starts to clearly outstrip distribution. The bottom line is that individual stock and ETF charts are broken in every sector, outside of the dollar, treasury bills, gold, and gold miners. Until these other stocks can correct themselves with some consolidation on lower volume followed by breakouts on strong volume, any NEUTRAL or BUY signal will be weak and unimportant. It is going to take time to correct the damage that has occurred. There is not much else to add as we have been under a SELL signal for a month now. It is summer time and while it is supposed to be a time of “living easy (Sublime reference)” it is clearly not for the stock market. Until the price/volume action changes on the overall market indexes by a wide margin on the accumulation/distribution readings, we will continue to recommend 100% cash for the public retail investors and short positions for active traders/investors. Aloha everyone and have a wonderful upcoming week. Top Current Holdings – Percent Return – Date of Signal BVSN short – 76% – 3/16/12 AVD – 75% – 1/10/12 LQDT – 65% – 2/1/12 UVXY – 62% – 5/9/12 MNST – 40% – 1/13/12 VRNM short – 34% – 4/10/12 PHMD short – 34% – 5/11/12 MAGS short – 33% – 4/18/12 PRXI short – 33% – 3/30/12 SINO short – 32% – 4/12/12 ABR – 25% – 2/29/12

Big Wave Trading Portfolio Update And Top Current Holdings

Every single disaster is due to traders not cutting their losses and letting them grow into huge losses. -Dennis Gartman “If you have an edge and if you keep making good bets as opposed to bet on chance over time you will come out ahead.” -Larry Hite The Big Wave Trading Portfolio remains under a SELL signal generated on 5/4/12. We expected that an oversold bounce was coming this past week and indeed it did begin. We expect the rally to retrace back to at least the downtrending 50 day moving average. If it does not make it back to that key technical level before beginning to sell off again, we will see that as quite bearish. Big Wave Trading will not be interested in any new BUY signal generated, if in fact the indexes do retake the 50 day moving average, as there is too much technical damage to individual stocks and the accumulation/distribution on the major market indexes are really out of whack. The only kind of rally that would change our mind would be a powerful 2%+ move higher on volume well above (25%+) above the 50 day volume average. The technical landscape of the overall market indicates further price deterioration ahead. However, as always, we do not have free markets and that means the Federal Reserve can start QE3 whenever they feel enough fear that they have to act. This, obviously, makes it tough for trend following and is thus why we continue to recommend smaller position sizes when trading stocks here. Another big volume move lower, with our current shorts all doing well, would be our signal to increase our short positions. For now, we are being cautious holding high levels of cash. As always cutting losses immediately when wrong is the smartest thing you can do in this trendless 2011-2012 environment or any other environment for that matter. By doing that you can get the one or two moves a year to pay off for all the small losses (like July-August 2011). Enjoy the rest of your Memorial Day weekend. Aloha. Top Current Holdings – Percent Return – Date of Purchase AVD – 78% – 1/10/12 LQDT – 74% – 2/1/12 BVSN short – 71% – 3/16/12 MNST – 42% – 1/13/12 PRXI short – 36% – 3/30/12 UVXY – 32% – 5/9/12 VRNM short – 30% – 4/10/12 SINO short – 27% – 4/12/12

Big Wave Trading Portfolio Update And Top Current Holdings

“I did not for one moment consider abandoning my chief defensive weapon—the stop-loss order. No matter how well built your house is, you would not think of forgetting to insure it against fire.” -Nicolas Darvas “Remember, the market is designed to fool most of the people most of the time. Sometimes, the market will go contrary to what speculators have predicted. At these times, speculators must abandon their predictions and follow the action of the market. Never argue with the tape. Markets are never wrong, but opinions often are. I only try to react to what the market is telling me by its behavior.” -Jesse LivermoreThe Big Wave Trading Portfolio model remains under a SELL signal generated on 5/4/12. The SELL signal was very strong but four false signals (3 SELL, 1 BUY–first time that has happened in the model since 1979) left us gun shy from going 100% all-in on the most recent strong signal. While this is unfortunate in the IRA/Retirement account (since it can not go short), as we are under-investing in inverse ETFs that are doing very well for us, it has worked itself out in the Aggressive/Margin account. Tons of stocks have produced very strong short signals for us since 5/4/12 and almost everything we are touching is working immediately. A far departure from the past two months. We realize that the market is very oversold here and thus it would be very dangerous pushing new short positions. If the market does not get a bounce on continues to selloff, we will continue to reduce the exposure in each new short signal that we receive. If the market can manage a bounce here and the charts stay broken with no real sign of accumulation in the market or leading stocks, we will look to fully press our bets on the inverse ETFs in the Retirement account and on shorts/ETFs in the Margin account. If the market does bounce, we get some good accumulation in leading stocks, and our current shorts start giving us cover signals, we will be more than happy to get exposure to the long side. However, we believe the fact that Facebook came public in such an environment and the fact that insiders sold over 50% of their personal holdings on the first day tells us everything we need to know as it relates to the 3-year bull”shit” market. I will redirect everyone to this post on April 23rd that I wrote for Seeking Alpha. It was denied publication because of its “technical analysis” content. That sure was unfortunate for their readers as the level of bullish articles that day was extremely intense. Aloha and have a great weekend. Current Top Holdings – Percent Return – Date of Signal BVSN short – 69% – 3/16/12 AVD – 65% – 1/10/12 UVXY – 63% – 5/9/12 LQDT – 62% – 2/1/12 SINO short – 37% – 4/12/12 MNST – 36% – 1/13/12 VRNM short – 34% – 4/10/12 PRXI short – 28% – 3/30/12 WZE short – 25% – 4/10/12

Big Wave Trading Portfolio Update And Top Current Holdings

To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate. — Jesse Livermore “Every once in a while you must go to cash, take a break, take a vacation. Don’t try to play the market all the time. It can’t be done, too tough on the emotions.” — Jesse Livermore “FYI – JPM $2b loss was someone’s $2b gain.” — Big Wave Trading’s second-in-command, MarketSpeculator The Big Wave Trading Portfolio continues to be under a SELL signal triggered on 5/4. This has been the strongest SELL signal YTD as multiple confirmations in various futures/ETFs were triggered. However, due to the current choppiness of the market, possible QE3, and frequency of recent false signals, we are moving slower into our ETF positions. Still the bottom line is that the signal remains true and proper price/volume action is following. While we remain under a SELL signal we have been getting a lot of long signals from the Biotech and Housing related sectors of the market. Indeed it remains a mixed tape. There is more bad than good out there but it is still not weak enough to push short positions heavy. If there were not any long signals in quality stocks, this would have us wanting to push. Instead we will be patient and wait for real follow-through to the SELL signal that was produced on 5/4. Overall we remain like water. Very liquid and willing to move from one direction to the next until we get what we need to push us all-in on full margin. Right now, capital preservation instead of hitting home runs remains the name of the game and has been since our large gains in February were completely taken away by March and April false signals. It’s a tough environment but professional traders know that a big trend always follows. This type of tape is meant to wear you out not necessarily knock you out. Those that are patient and careful with their capital when signals are not immediately followed-through are going to do much better than wild and loose trading. If we do not break down here and instead reverse back above the indexes 50 day moving average obviously the SELL signal will be taken off. We remain under the thesis that any rally here to new highs would be even more bearish than before. Volatility is too low and breadth is too poor for any sustainable uptrend to come about. A market being lifted by a few stocks always crashes. Before we can have any real uptrend to make some real powerful gains, this market needs to correct. If QE3 comes to the rescue we believe that it will only lead to a more powerful and vicious black swan swoon. A correction here would be healthy. A rally would not. Only after a correction will we be looking to get heavily long high quality breakouts in stocks or fully long a BUY signal with leveraged ETFs. Top Current Holdings – Percent Gain – Date of Signal LQDT – 79% – 2/1/12 AVD – 75% – 1/10/12 BVSN short – 64% – 3/16/12 MNST – 42% – 1/13/12 ABR – 28% – 2/29/12 VRNM short – 27% – 4/10/12

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

“Don’t spend your time and energy chasing mediocre trades and investment opportunities. Only move when the odds are overwhelmingly in your favor.” -Brian Hunt

“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, nor for the get-rich-quick adventurer. They will die poor.” – Jesse Livermore

The Big Wave Trading Portfolio remains under a NEUTRAL condition but is near switching to a SELL signal. Had volume come in above average on Friday or had price dropped 2% on the SP, Russell, or Nasdaq, it would have switched. Our internal indicators that measure price, volume, and time on many different levels are all in confirmation of the short-term downtrends that are starting to appear on the indexes. At the same time, every single ETF is in full confirmation with their short-term downtrends and every single inverse index ETF is in full confirmation with their short-term uptrends. This action along with the constant non-stop poor action in individual stocks outside of the biotech and monster leading stocks (AAPL PCLN CMG SBUX) universe does not bode well for current bulls. Everything points to our model switching to SELL next week. However, there is one caveat that our model can not price in and has no way of knowing when or where it will come from. That is Ben Bernanke. As long as the government interferes with free markets price and volume is going to generate more false signals than we ever would have seen pre-2008. Since they can simply inject liquidity to a market that has no buyers, we have to respect that many high volume breakdowns are simply not going to work like they used to. If you are a big seller and you know the Fed is going to magically lift stocks higher why would you keep selling? You wouldn’t. You let them lift it higher then unload more and wash, rinse, repeat. The good news is, just like in July to August, you get a real break where sellers simply overwhelm whatever in the hell the Fed is doing. Looking at any long-term arithmetic daily, weekly, or monthly chart it is clear to see the big-cap monster leading stocks are going from extended to parabolic territory. Google finally announced a split. It staged a late-stage-base-failure breakdown on heavy volume. Now all we need is for Apple and Priceline to split and we can start to get a sense of what 2000 felt like before it ended. I will make it very very very clear that this is in no way like 1999. Trust me! However, the fact that so many CANSLIM high-quality stocks are acting so strange, volatile, and some with no rhyme or reason towards price and volume, can not overall be healthy for the market. If these leading stocks continue to hold up relatively well to the overall market, it is always possible that following a correction we could blast off higher. As of now, whether this is just a correction or the start of a new downtrend, it is pure speculation. All we need to know now is that stocks look extremely vulnerable here, the indexes carry a lot of distribution days in them, the internal momentum price, volume, and time indicators are all very bearish, recent longs failed, and new shorts are working. Those are the facts. It does not bode well, short-term, for the market. However, these facts do not matter in a world of quantitative easing. Anything can and will happen. In this stock market you are either patient and wait till all the ducks line up before you move or you must be very quick to change. If you are not quick to change in this market environment you will be dead.

Top Current Holdings – Percent Return – Date of Signal

SWHC – 74% – 1/3/12
AVD – 71% – 1/10/12
EPAM – 48% – 3/7/12
LNKD – 44% – 1/19/12
LQDT – 42% – 2/1/12
BVSN short – 34% – 3/19/12
PRXI short – 34% – 3/30/12
MNST – 28% – 1/17/12
ULTA – 28% – 1/13/12
DANG – 25% – 3/30/12

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