Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading portfolio remains under a BUY signal, generated on August 3rd, as the market continues to move higher on well above average volume. On Thursday, for the first time during this rally, we saw the indexes, ETFs, leveraged ETFs, inverse ETFs, and leveraged inverse ETFs all move in the right direction on well above average volume. This is the confirmation we need to start to increase positions in new longs and to look to buy the dips when the dips do come in leading stocks that are short term too extended from their 50 or 200 day moving averages. The increase in volume during the past seven trading sessions and the improvement in the breadth of the advance/decline line and the upside to downside volume is excellent to see, if you are long and/or are expecting further price gains. September and October have historically been months when the stock market stages strong rallies. March is another month where powerful rallies begin. This rally started before Labor Day and the current action is definite confirmation that the trend for now must be respected. Now, I know a lot of individuals are upset at why the market is rallying (backed by Quantitative Easing). I share your concern and agree that it is the wrong policy for wiping the slate clean and starting a real economic rebound. Putting a band aid on a femur shaft fracture isn’t going to fix what is really wrong. However, maybe they don’t want to fix what is really wrong. And this is my point. Price is all that matters to us. These individuals that are in charge around the world, that make horrible decisions against the voice and concerns of the tax payers, are going to do what is in there best interest. Not in what is our best interest. What is in your best interest, knowing this, is to take control of your future by learning how to invest in a solid time tested proven trend following methodology. That is the only way those in the bottom will ever be able to save any money. With inflation the way it is and with bank CDs rates so low, what other choice do you have? That is what we are here for. Aloha and enjoy your weekend! Top Current Holdings – Percent Gain – Date of Purchase AVD long – 115% – 1/10/12 BVSN short – 82% – 3/19/12 NTE long – 54% – 8/17/12 CLGX long – 54% – 6/19/12 CAMP long – 32% – 4/26/12 PRXI short – 30% – 3/30/12 VRNM short – 29% – 4/10/12 PXD long – 28% – 7/17/12 MAGS short – 28% – 4/18/12 SVNT long – 25% – 9/10/12

Stocks Slide as Volume Slips

Jobless claims and New Home sales disappointed setting a negative tone for the entire trading day. Federal Reserve President Bullard did not confirm a new quantitative easing program, but gold and silver still jumped higher. The two precious metals are certainly trading like there will be another easing program. Buyers did try to get the market higher before the lunch hour, but they did not have enough ammo to push the market back into positive territory. Tuesday’s high remains a road block for this market we have moved lower on lighter volume. Today was a consolidation day, but it is time for institutions to step up and support this market. The continued move in the precious metals has been quite impressive. What it all means is really anyone’s guess. An educated guess would be the metals are moving because of a new easing program. What about a lack of confidence in the US Dollar? ECB bond buying? We can certainly make up plenty of different reasons for the move. However, are you busy worried about the why rather than just getting aboard and taking advantage of the run? The “why” always comes, but we aren’t about to wait and waste an opportunity for gains. Sentiment has shifted to be in the bulls camp. AAII survey showed the amount of bulls jump to 42% the highest for this recent uptrend. Bears slipped to 26%, but many remain on the sidelines. 42% is not at an extreme level and anything above 48% would be considered extreme. 26% is low, but for bears anything around 20% would be too considered extreme. Current sentiment really only highlights the neutral nature of the survey respondents. This weekend will be the last weekend before the office end of the summer season. Make sure you get out there and enjoy the last of summer. Remember, know your entries, position size, and your exits.

NASDAQ Closes in the Green as Stocks Find Support at Friday’s Lows

It was another quiet Monday trading session, as AAPL and GOOG lead the NASDAQ higher closing just off the highs of the session. Volume was once again lower on the day, as we proceed through the dog days of summer. Commodities traded lower on the day, as gas at the pumps has rebounded higher putting pressure on consumers. When the market hit its lows, after the 11 o’clock hour, buyers began to show up supporting the market. While volume wasn’t highe–showing institutions piling back into the market–the price action was considerably bullish. There is quite a bit of economic news set to hit the market the rest of the week and we’ll certainly see the market move. PPI data out tomorrow and CPI data out Wednesday will certainly spark debate regarding Federal Reserve policy. The more we see deflation the more folks will make a case for another round of quantitative easing. To us it is noise in regards to our trading, but for a cocktail party (a boring one) it makes for good banter. Price matters most and although debating Fed policy is fun for some it is not useful for our trading. Today was overall is a bullish day, but boy was it a boring day. Europe was mostly lower and we failed to get any rumors from central banks. Boring days are good when you do not get epic failures from leaders. Leadership remains thin here and cash is king, but we have seen stranger things from this market. The next big thing from the US Central Bank is the Jackson Hole summit at the end of this month. All eyes will be on Ben Bernanke to see if he hints at or lays out the plans for another easing program. Up until then, I’d expect very little from the Fed. Rumors will always be present, but price always gives the clue. Remember the most important part of trading is knowing entries and exits. Cutting losses is most important piece to your trading!

More Twist, No QE as Stocks End Flat

The story of the day was the Federal Reserve and its actions. With very little on the economic front the market turned and waited on the Federal Reserve to deliver its rate and policy announcement. Failing to initiate a third round of quantitative easing the Federal Reserve did extend its “Operation Twist” until the end of the year. Stocks reacted in volatile fashion and during Bernanke’s testimony, but finally settling near the unchanged level as volume fell on the day. Taking a step back we saw a good day of consolidating the recent gains. Avoiding any further deterioration will be a must for us to continue on a new uptrend. Gold and crude oil did not react as if there was going to be immediate action by the fed to pump more liquidity in the market. Crude was down more than 4% at the stock market close a big tell the trend in crude remains to the downside. Gold finished down roughly 1% on the day as both commodities continue to act as if the Federal Reserve will not print any money any time soon like the equity market. It is quite clear stocks are expecting the fed to step in with further easing to support the market. At the end of the day we follow price and where it goes we do. Opinions mean very little. Listening to Bernanke during his press conference it is apparent he is looking for Congress to get its house in order. The unfortunate part of the quantitative easing is in order for it to work properly budgets must be balanced. Continuing to raise the debt burden only acts as a drag on the economy. Sure short-term bursts of debt are okay and manageable. However, massive debt spending over extended periods of time coupled with money printing is very flammable. History has provided enough evidence when money printing goes unchecked, fiat currencies always dissolve or evolve causing very painful contractions. We need our fiscal policy in order to avoid financial disaster down the road. Luckily we have price as our guide and we’ll be taking full advantage. The future is unknown and while many will try to predict what will happen know one actually knows. Using a rule based system allows us to focus on what matters and ignore the junk you hear from the financial media. Cut those losses and let your winners run.