Shanghai Drops more than 5% sending World Markets Lower

Despite an impressive move off the lows just after the lunch hour the final hour of trading was won by sellers. Closing off the highs of the session major markets with the exception of the Dow were down more than one percent on the day. Volume simply could not compete with Friday’s level due to quadruple witching. VIX enjoyed a volatility day closing up 6.5% to 20.12. Summer time trading has arrived and we expect the volatility to continue and given the increase in volatility we will adjust. Shanghai dove more than 5% as the liquidity issues continue to evolve in China. One thing is for certain the Shanghai Composite is in a severe downtrend and trying to catch a falling knife is not something one should attempt. Perhaps the index will get a bounce this evening, but it will likely continue to the downside over the longer-term. 2013-06-24_SHANGHAI_COMP_daily The one saving grace perhaps for our markets will be the 200 day moving average will likely serve as a reasonable spot for the markets to bounce. It is anyone’s guess whether or not it will lead to new market highs, but a logical spot for the market to bounce nonetheless. Volume will be an important key in determining whether or not institutions will come out and support stocks. Today, it was a mix bag with the final hour selling really putting the damper on a sustainable bounce. A few other items will certainly help give a lift to the markets. Both the RSI and McClellan indicators are near areas where the market has bounced historically. It isn’t a given a market bounce will occur, but if one were to occur it would not come as a surprise to us. We’ll be paying attention to our stocks and will act accordingly if and when signals come our way. Everything else is just noise. Economic data today was light, but an uptick in the Dallas Manufacturing Survey was better than expected. Tomorrow we’ll get a read on Durable Goods and Wednesday we’ll get a read on GDP. Not the start to the week bulls wanted even with the intraday rally. Make it a great week. Join the Big Wave Trading team.

Big Wave Trading Portfolio Update And Top Current Holdings

Big Wave Trading Margin and IRA accounts remain nearly fully invested (85%-95%) as our Market Model remains under a full BUY signal. That signal was triggered on 1/5/12. Big Wave Trading is currently watching the current pullback to see if it will result in a short-term top or a normal pullback that will lead to a resumption of the current uptrend. As of Friday, there are no distribution days to signal that anything more than a pullback is occurring. Big Wave Trading will use this pullback to sell off any stock showing a loss or any stock lagging the overall market by a significant degree. The money raised from selling our laggards will be deployed in new long positions or current long positions accordingly as they arise. If the pullback gains steam and distribution days mount, measures will be made to raise cash as indicated via our Market Model as it switches to NEUTRAL or SELL.

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

FFN – 51% – 2/7/12
IRE – 51% – 1/12/12
JKS – 37% – 1/27/12
MOTR – 49% – 2/2/12
RENN – 34% – 1/11/12
YINN – 30% – 1/5/12
UMDD – 26% – 1/5/12
RF – 25% – 1/5/12
FAS – 24% – 1/5/12
HK – 22% – 1/9/12
LNKD – 21% – 1/19/12