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

INTC AAPL Weigh Down Stocks in Light Volume Session

Big cap technology stocks and financials struggle as the market gives back more than half of last Thursday’s breakout. The good news on the session was the fact volume was lower and institutions were not big sellers. INTC was an excuse for the broad market sell off as the company took down 3rd quarter estimates. AAPL stock hit an all time high before sellers ransacked the stock ahead of its September 12th new product launch. Sellers pushed hard at the end of the day as VIX rose more than 1.85 points. The fear index is still sub-20 mark, but the move at the end of day showed fear crept back into the market. While we didn’t hit a day of distribution this not exactly the type of consolidate we were looking for, but we remain in an uptrend. The lone bit of economic news the market received today was consumer credit. In the month of July consumers reduced credit by 3.28 billion dollars. Economists expected the figure to be at 9.6 billion. It is nice to see consumers reducing their credit and not further their issues with even more debt. Tuesday will be a bit more active, but nothing that will make headlines on the day. Besides, everyone’s attention will be on AAPL’s even on Wednesday and the FOMC rate decision on Thursday. Leading stocks did not fare too well today either. One notable leader TDC was hit hard on the news of INTC. Volume across many names were low, but the price action among them were not kind in the slightest and does create a heighten level of doubt in the market. One day does not make the market, but we cannot see this type of action continue. We’ll need to see the market gain some traction with volume support. It is one thing to be defensive it is another to act on fear. Stay focused on price and where your exits are. Many traders fear they may lose gains and take profits too early finding out later their stock is higher. Know your exits prior to entry and you will not need to worry about anything in between. We aren’t off to the best start to the week, but there is plenty of time for the market to turn around. Ignore the noise and cut your losses

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading portfolio remains under a BUY condition with strong confirmation of the original signal coming on Thursday when every single important stock market index we track broke out convincingly on enough volume to qualify the breakout as strong. The tight intraday action on Friday with a HOD close in the NYSE and SP500 confirm the move on Thursday. This strong move is coming on the back of the NYSE short interest ratio hanging out at 5-year highs around 21.27. This breakout is also coming with bulls, bears, and those on the sidelines coming in at exactly 33% across the board. That means that NYSE short interest is very high, the crowd is not particularly bullish, and stocks are breaking out everywhere with some big names making clearly bullish moves. GS, BAC, CS, JPM, DB, GM, and many other corporate global behemoths are making very bullish moves. If the crowd continues to stay bearish we could see a very powerful short covering rally released. The only odd thing about this move is that it is coming with bulls at 52% and bears at 24% on the Institutional Investor survey. However, bears crossed above the bulls way back in October where the market actually bottomed and it is still nowhere the 5-year bulls high of 62% and the bears low of 15%. Our advice is to follow the price action. While it has been pretty shady for the past couple of years, in terms of trusting this price action, there have been times trends have developed. Let’s hope this time it is for more than one or two months. The potential good news that this rally could last is that we received a lot of strong buy signals in high quality individual stocks last week and this week before the Thursday breakouts in all major important market averages. We shall see what the upcoming weeks and months leading into the election give us. Remember, one or two distribution days is not reason to sell the market short. The key is to watch for 4 to 6 of these days showing up over a two or three week time frame. If you see that, then we can start to worry. However, if that happens I am sure buying unlimited bonds in the USA is not out of the question for the ugly monsters that are Congress and the Federal Reserve. Aloha and have a wonderful and fun weekend! Top Current Holdings – Percent Gain – Date of Signal AVD long – 114% – 1/10/12 BVSN short – 82% – 3/19/12 NTE long – 46% – 8/17/12 CLGX long – 46% – 6/19/12 VRNM short – 37% – 4/10/12 CAMP long – 35% – 4/26/12 PRXI short – 31% – 3/30/12 MAGS short – 29% – 4/18/12

Stocks Stage Powerful Rally as Volume Swells

Mario Draghi and the ECB took center stage this morning announcing a new bond buying program. The ECB delivered on its rhetoric it would do all within its power to save the EURO. Stocks cheered the move and futures rallied. ADP employment figures came in better than expected as well as jobless claims. However, neither the ECB nor these economic reports got the market moving like the ISM non-Manufacturing index. Institutions stepped in a big way scooping up shares after the service sector expanded. Buying continued and the gains of the day were locked up with the market closing at its high of the day! A very bullish day and today is precisely the day we were looking for as a continuation of the summer uptrend. There are plenty of stories out there with all the hedge funds and other institutional players that are massively under invested. Headwinds like the fiscal cliff and European debt crisis have kept many market players from investing in this market. Missing out on today’s move is certainly going to set back many, but the problem really is having an opinion on the direction of the market. If you simply followed where price was telling you wouldn’t have missed out on the rally today. Ignore the headlines you read and follow the price action in the market. Sentiment has been mixed with neither side reaching an extreme level. This week’s reading from the AAII sentiment survey showed bulls and bears equal. The market has been consolidating its gains from the June lows and it is no surprise there was neither a bullish or bearish tint. However, it does showcase how many people missed the rally today. Now, will we see immediate follow-through from today’s action or do we see this rally fade? Until price tells us otherwise we are are going to push forward on the long side! We witnessed a very bullish day ahead of tomorrow’s job report. Unemployment is expected to hold steady at 8.3% and roughly 130,000 jobs added in the month of August. It would be nice to see the labor participation rate to expand and the unemployment rate to drop. That would be very nice. When all is said and done it is about price and we’ll act accordingly. Have a great weekend.

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a BUY signal from 8/3/12, following the past week in the stock market. There was not much that went on this week that changed anything from the previous BWT Portfolio update. The only significant event this week occurred on Friday with Gold, Silver, and Platinum ripping higher following Ben Bernanke’s speech. A long position in GLD 150 calls two days ago paid off with a 32% gain today alone. We expect much further prices ahead for Gold, Silver, and Platinum and will use subsequent buy signals to increase our exposure to this area of the market. As for stocks, everything remains under a steady albeit slow uptrend. Unfortunately, there continues to be below average volume on this move higher but NYSE turnover did come in above average on Friday and that is encouraging sign if we are to see continued higher prices. We do realize that historically low below average volume rallies can lead to severe and quick pullbacks as market participants return to the market. While this scenario is plausible, the technical action, along with the high level of shorts on the NYSE (NYSE short interest ratio is at 20.97), indicates that further price appreciation should occur. There is not much else add to this report that was not already stated last week. Our focus will continue to be on commodities and precious metals, until higher overall volume on the general market indexes returns. Have a wonderful long Labor Day weekend everyone. Aloha! Top Current Holdings – Percent Return – Date of Signal AVD long – 104% – 1/10/12 BVSN short – 82% – 3/19/12 NTE long – 55% – 8/17/12 CLGX long – 41% – 6/19/12 VRNM short – 37% – 4/10/12 PRXI short – 35% – 3/30/12 CAMP long – 35% – 4/26/12 MAGS short – 29% – 4/18/12 STX long – 29% – 6/29/12 PHMD short – 27% – 5/11/12

Stocks Notch Another Low Volume Summer Session; GDP Growth In line with Estimates

No surprise GDP growth was in-line with estimates as pending home sales jumped more than expected. Both figures failed to ignite buying as the market hit the day’s low just before 11am. Once again buyers stepped up to the plate supporting the market. Support wasn’t ferocious as volume registered lower than yesterday’s pathetic levels. Volume just isn’t there during the final week of the summer. Institutions are not stepping up and putting their money to work in front of Ben Bernanke’s speech in Jackson Hole. While the price support is positive it is very difficult to have much conviction in the market in either direction. According to MarketSmith’s shorting data we continue to see the NYSE Short Interest hitting 5 year highs. Are we simply seeing a massive short squeeze? Or is the SMART money right and a pending collapse is about to occur? It is anyone’s best guess here which way the market goes. Quite frankly it is much easier to doubt the market with all the potential headwinds the market faces. China, Europe, and the Fiscal Cliff can easily be used to make a bearish case. Despite the argument and from a trading perspective when do you exit your losing position? How much do you risk? Trend following is powerful because it cuts through the fundamental non-sense and positions you to what matters most: PRICE. With very little happening in the market there have been bright spots and opportunities for BWT to exploit. The last thing we want to do is miss a signal. Missing signals decreases your opportunity to capture upside and why it is so important not to argue with your system. Follow it and do not let your opinion get in the way of your trading. You’ll be surprised how much more success you’ll have by not ignoring trading signals. Remember always know your position sizing, entries, and exits! Cutting losses is your insurance policy and your number one rule!

Stocks and Volume End Mixed as Consumer Confidence Dips

A positive Case-Shiller housing report was over-shadowed by a disappointing drop in consumer confidence. Volume ended mixed on the day, but did not trigger any distribution. The market appears to be waiting word from the Federal Reserve head Ben Bernanke on Friday. We did see support coming into the market just after the consumer confidence debacle, but we didn’t see the market follow-through on the buying. The final hour did see a push, but was quickly met with sellers. Summer trading continues and it will conclude with Bernanke’s presentation Friday. Tomorrow we’ll get another read on GDP and the market is expecting the economy grew at a 1.7% pace. My best guess is GDP figure comes in line with estimates and it won’t really matter to the market. Bernanke’s speech at this point is probably overshadowing any economic release including GDP. In the end it boils down to price and we’ll keep our attention to what matters most. It is a shame the United States can’t generate growth beyond 1.7%. We are a double digit trillion dollar economy and growing at a solid 4 or 5% clip would be difficult. The law of large numbers comes into play here, but it would be nice to get more growth out of this country. Remember Iceland and Estonia? Iceland didn’t bailout its banks, it prosecuted its bankers. Estonia cut spending and took its medicine, but is growing at a great clip. Perhaps we should take some notes on what works and implement that. There isn’t much else going on in this market until the big boys come back after Labor Day. NTE running again today and we’ll take a few more profits on this bad boy. A few other stocks continue to move higher, but we aren’t seeing any explosive moves. They will come back and we’ll be ready. The question is are you ready?

NASDAQ Stalls as the Market Ends Mixed

Friday’s early evening news regarding AAPL’s patent fight with Samsung helped boost the stock today sending the NASDAQ higher at the open. The initial pop in the NASDAQ was certainly attributed to AAPL’s move, but stock would stall out before the lunch hour. A steady decline into the end of the day with the exception of a last two minute rally had stocks near lows of the session. Volume ran higher on the NASDAQ, but with volume so far below average it is very hard to label today as a “stall day” adding to our distribution count. The current rally is hanging in there and with the final week of summer upon us trading should stay light until after Labor Day. Today’s price action wasn’t ideal for an uptrend. A gap reversal like we saw today is normally a bad sign for the market. However, with AAPL providing the majority of the boost for the NASDAQ and very light volume anything is possible here. We are essentially discounting the move in price due to the obscenely low volume. The real players will all return after Labor Day and we’ll certainly see volume pick back up. The lone bit of economic news came from the Dallas Federal Reserve Manufacturing activity index. Economists polled expected a drop of 6.5 while the reading came in better at -1.6. Essentially the Dallas Fed saw a slowing, slowing manufacturing pace. Later in the week we’ll get another GDP reading which will likely show tepid growth. Second quarter growth is slated to come in at a wonderful pace of 1.7%. If you did not detect sarcasm there was plenty of it in that last sentence! Where are our 4% GDP days? Perhaps at some point we’ll get there, but when is the biggest question no one can answer. It is nice to see some of our stocks soar. A prime example of one we’ll be taking some profits on is NTE. We’ll continue to take advantage of this market as opportunities present themselves. Headlines will start rolling with Bernanke at Jackson Hole this week and you never know with the ECB’s Draghi providing headlines. We’ll stick with our disciplined approach and follow price. We’ll let the guess work to others. Make it a great week.

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a weak BUY signal, following a week of constructive price action in the overall market. We continue to keep positions relatively small as volume continues to be completely absent in the stock market right now. Traders are still on vacation and there has not been a single what we deem “perfect” or “near perfect” signal since the BUY signal has been triggered. We will continue to operate on a small level until volume returns to above average daily or weekly levels in the overall market or a strong “perfect or near perfect” signal is generated. As for our opinions on the future direction of the market. We do not have any. However, in analyzing the current situation we find similar parallels to the price action in the summer of 2000. Obviously, this time it is much different as it is not coming from a post-bubble pop. However, as someone that follows history, this must be taken into consideration. A low volume rally is always suspect to heavier volume selling and with another week of August still left it is possible that the low volume rally will continue until Labor Day. If that is the case, that is when/where it then gets interesting. Will wall street come back post-Labor Day and see the gains on small volume and begin dumping shares? Or will wall street come back post-Labor Day, see the melt up on low volume, then see the 5-year high of the NYSE short interest ratio at 19.92 (MarketSmith numbers), and then squeeze the shorts to death? There is not one person out there that can answer that question. We must let price be our guide. If volume was heavier on this leg up and NYSE short interest was increasing, then I would lean to a powerful possible rally coming into election season. However, with the volume being so low, a pullback can easily materialize here. We will continue to go with the flow of price and use options to allow us to generate outsized returns that was once attainable via stock purchases alone with margin before 2011. The one extremely bright spot for us lately has been the earnings winners. Stocks gapping up on volume following earnings announcements have done brilliantly and those around in the morning taking the advice given from BWT traders have benefited greatly. Sadly, earning season is wrapping up and that means that we will have to wait 3 more months for these explosive moves that have given us an extremely high reward/risk right/wrong gain/pain ratio to come around again. There are a lot of so-called bulls out there in the II and AAII survey. There are a lot of shorts out there according to the NYSE short interest ratio. Which one is right? It doesn’t matter. Right now, all that matters is price. Follow the price. It is the only thing that doesn’t lie. Top Current Holdings – Percent Return – Date of Signal AVD long – 97% – 1/10/12 BVSN short – 82% – 3/19/12 CLGX long – 39% – 6/19/12 STX long – 37% – 6/29/12 PRXI short – 36% – 3/30/12 PHMD short – 31% – 5/11/12 VRNM short – 30% – 4/10/12 MAGS short – 27% – 4/18/12

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.

Bill Gross Handicaps QE3 at 80% as the Fed Hints at a new Money Printing Operation

All eyes were on the FOMC meeting minutes today! Our attention was on the price action, but market pundits were looking for the FOMC to hint at further stimulus from the central bank. Bill Gross tweeted shortly after the release of the minutes there is now an 80% chance we get a new money printing program. In the minutes, the FOMC noted the economy would need to improve for them NOT to act. More importantly the market reacted to the news initially moving higher. While the market did close off the lows of the session the market didn’t explode higher. We remain in an uptrend, but we still want to be aware of further distribution and act accordingly. Gold and silver moved higher on the news of the FOMC acting once again. Both precious metals have been relatively quiet for most of the summer despite stocks moving higher on FOMC hopes. At the moment GLD and SLV are in uptrends and look to be moving higher. All we care about is that they are moving higher and we have plotted our exit. We are still going to keep an eye for this market to take out yesterday’s high. Tuesday’s distribution day also is acting as a stall day. Stall days are high volume reversals when an uptrend hits a new high. In order to negate the stall day like we saw last week the market will need to take out the high on volume. Last Thursday we did see the market overcome a stall day and is a bullish signal. It will be important to this uptrend if we are able to repeat last week’s success. Any pile up of distribution here will not be a good sign for the uptrend. Know your exits and when the market signals your exit GET OUT. An unfortunate side effect of money printing operations is inflation. The way the government calculates CPI is a unique way of hiding true inflation. Gasoline and food prices are the most important to every American. Rising gas and food costs are a HUGE tax on the poor and lower/middle class families. It’ll be interesting to see the fall out if QE3 does come along. Remember to always cut your losses!

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading model switched to a BUY signal on Thursday. This signal was generated thanks basically to the performance of earnings winners, the Relative Strength of the Russell 2000, and a volume surge on the Nasdaq. There was no confirmation with volume in any other index or ETF. Sadly, overall, there continues to be a lack of any momentum in the market following a stock price breakout. The good news is that there is a lot of momentum in earnings winners gapping up on very strong volume. Almost every single stock recommended at Big Wave Trading, in the pre-market, for the past two weeks, has worked and continues to work. This is a very encouraging sign for the possibilities of higher stock prices and a sustained trend. The argument against a sustained uptrend include the low below-average volume on this rally and lack of leadership by the big high priced stocks. The argument for a sustained uptrend include the recent outperformance of earnings winners to earnings losers and the extremely high short-interest ratio on the NYSE. The NYSE is ending the week at or near 5-year highs (can I please have one day where the data corresponds to other data providers across the board. Sheesh.) according to MarketSmith. This ratio is currently around the 19.50 area which is kindle for a huge possible stock market fire. If algorithms continue to lift this market on low volume, it is possible that this will cause a painful short covering rally for those that are simply too bearish here. If a short covering rally does start soon and money continues to come out of bonds possibly finding a home in the stock market, it could be quite a move. On top of this high level of short interest, we are almost out of summer time and that means a possible September and October stock market rally. The stock market usually likes to start strong moves in one direction or the other in October. Crashes happen in this month a lot and a lot of sustained rallies start in this month. If we rally here, pullback in September, and start moving on strong volume in October it could lead to a very exciting moment where we finally produce some big winners. However, all of this is speculation so no conviction will be put into this. Overall, the market remains healthy, despite the absolute lack of volume, and as long as this continues there is nothing to do but go with the trend. There are a couple of weeks left in August so we will probably have to deal with the low volume for a little while longer. After Labor Day we should see some volume return to this market. Or not. I can’t predict the future. I only know the now. Right now, we are melting up slowly on no volume. It is what it is. Have a great weekend everyone. Aloha from everyone at Big Wave Trading. Top Current Holdings – Percent Gain – Date of Signal AVD long – 104% – 1/10/12 BVSN short – 82% – 3/19/12 STX long – 44% – 6/29/12 CLGX long – 40% – 6/19/12 PHMD short – 39% – 5/11/12 PRXI short – 35% – 3/30/12 MAGS short – 26% – 4/18/12 VRNM short – 26% – 4/10/12

CSCO Leading the Way Stocks Advance in Higher Trade

THURSDAY POST Stocks break out on above average volume lead by the CSCO after hiking its dividend and an upbeat earnings report. A strong move by the NASDAQ with above average volume certainly a big sign of strength and a clue Institutions were behind the move. CSCO certainly had a hand in the surge in volume, but it wasn’t the sole reason for the move and this is a clue Institutions had a hand in the move. Despite an awkward move higher off the lows we have an uptrend and now with volume to boot. Today’s move above Tuesday’s high on volume has rendered the stall day useless. The trend up and we’ll continue to act accordingly. Today was a certainly a nice breakout day for the market. This is what we have been looking for and with today’s move above Tuesday’s high on volume certainly is an encouraging sign. Leading stocks are doing well, but this is an earnings game and index game. AMZN is a stock who carries a very high price to earnings ratio, but broke out nearing an all-time high. We like to see this action from stocks and is an important piece of the puzzle to keep this market moving higher. Where will this rally end is anyone’s guess, but for now we need to be long and ride the wave higher. Sentiment did not change much week over week as bears came in at 28% and bulls at 37%. Not much movement from either camp despite the most recent move. Again, this is not a conventional market rally with all the economic headwinds we face. This rally simply points out your opinions do not mean much and price action will always rule the day. Tomorrow morning we’ll get to watch the nonsense induced by options expiry. I am sure many traders will be looking towards the weekend and leave early. Summer is almost over and everyone should be taking full advantage! Get out there and enjoy life.

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.

Stocks Stall Mid-Day as VIX Jumps off the Most Recent Lows

Just after noon, stocks took a dive, after rallying from the morning lows. The final hour of the trading session ushered in sellers pushing the major stock indexes to their final lows of the day. Only the last 5 minutes did we see buyers step up and save the market from broad distribution. Perhaps the robots are going crazy, but today’s action does constitute as a stall day. This most recent uptrend does have two distribution days across the board and now one stall day. Yesterday’s bullish intraday action was done so on light volume and therefore not as significant as today’s action. While not an end all be all day it is important how the market reacts over the remainder of the week. Today’s action is a red flag for the most recent rally and we’ll need to be aware of the market movements for the rest of the week. Still, overall, we remain in a slight uptrend and will invest accordingly. The VIX finally woke up on a day where intraday volatility was not relatively large. Fear has been absent since June when the market hit its most recent low. Perhaps the Federal Reserve put has driven away sellers, but today they did come back. Interestingly enough on March 16th the VIX hit a low of 13.66 and yesterday the index hit a low of 13.67. While it did not pin point an exact high the NASDAQ would hit its intraday high a little over a week later on the 27th of March. Perhaps this market can rally further and why it is important to see the action over the next couple of days. In order to continue to move higher we’ll need to see bullish price action. Keep an eye on distribution and stalling the rest of this week as it will be a hint where this market is heading. It took to the 3rd paragraph to talk about economic data! Retail sales jumped more than expected, but PPI came in hotter than expected. The market cheered the retail sales figures, but largely ignored the economic reports on the day. In the end, it really doesn’t matter and all that matters is how we concluded the day. Leave the economic talk for the water cooler discussion and not your trading. Tomorrow we’ll have more fun with economic data in the morning with CPI figures. If the CPI comes in higher than expected, it will certainly be viewed as a negative. Ben Bernanke knows further easing will bring on higher commodity prices and with the drought in the mid-west it presents a very delicate situation for the Fed Chairman. It is all about executing your trading plan. Know your position sizing, entries, and exits.

4 Stocks Moving Higher Post Earnings

4 Stocks Moving Higher Post Earnings

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!

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a NEUTRAL signal, despite the gains this past week. While the gains were decent, volume was completely absent. If the data from Telechart is correct, weekly volume for the NYSE was the lowest total for the year. My main three data providers always have different volume totals for the indexes so I average them out, usually. Even though volume is so low and there has not been a confirmation rally following the strong rally on 7/27, we were given one new long signal each day last week. Following, the recent action, our portfolio has hit a protective stop and trading has been reduced to the most minimal position possible per trade. This will last the entire month, until there is strong follow-through to these recent gains or a “perfect” signal is generated in an individual stock. These have been few are far between the past two years. The mere fact that our new long signals are still not blasting higher immediately and are instead just holding their breakout levels tells me that there still is not enough pent up momentum to blast stocks higher. With the VIX now below 15 and with the bulls increasing last week while bears decreased in the Investors Intelligence survey, I wouldn’t expect much fire if we do continue to rally. In saying this, it must be noted that the NYSE short interest ratio continuously hits new 5-year highs almost daily. This index now sits at 18.63 at fresh new 5-year highs. Even if volume remains low–never short a dull market–and institutions do not return, the mere fact that a little bit of HFT/algorithm buying can lift stocks up due to the lack of supply on the market, thus creating a painful short covering rally, means that this low volume rally can continue for some time. If these shorts start to cover and sideline money returns to the market, we will be more than happy to get long some ETFs for a rally. However, if volume continues to be below average, we are not going to bite. There are simply too many uncertainties. The only thing we are certain about at Big Wave Trading right now is stocks that gap following earnings. We highlighted many stocks the past week that we issued buy signals (and some short signals) on in the AM based on earnings. Those that followed the recommendations in the AM, profited. It was a great week for playing earnings winners and losers. For the past six months, this has been the only play that has been consistently profitable more so than not. Every other methodology employed this year has more losses than gains. Next quarter, we will increase the capital we normally place in these gap plays as they are just very profitable and continue to trend after their earnings dates. Breakouts and moving average bounces still can not be trusted as algorithms are figuring out how to pick us off in this low volume environment. For the upcoming week, we will continue to maintain an extremely extraordinary high level of cash until volume returns to the overall market. We will also continue to focus on stocks that gap up due to earnings and stocks that gap down due to earnings. For the stocks that gap down we require a major previous uptrend like MNST and PCLN. A stock like YHOO would not be considered. Aloha, have a great weekend, and don’t forget to go outside at night and check out the Perseid meteor shower tonight and tomorrow night. Top Current Holdings – Percent Return – Date of Signal AVD long – 98% – 1/10/12 BVSN short – 81% – 3/19/12 STX long – 38% – 6/29/12 CLGX long – 38% – 6/19/12 PRXI short – 35% – 3/30/12 PHMD short – 33% – 5/11/12 CAMP long – 28% – 4/26/12 MAGS short – 25% – 4/18/12

Stocks End Mixed as Volume Slips

Volume continues to back down from Tuesday’s level and stocks continue to hang in a holding pattern digesting the recent gains. We did get a bit more economic news showing Jobless Claims were less than expected and wholesale inventories fell. It will be nice when claims figures show job creation rather than continued job losses. Most economic news is for cocktail parties and not for trading or at least not for our style. After the Europe close EURUSD took a dive sending our markets to the lows of the session. Buyers were able to step up and support the market pushing prices back to near the highs of the session. Volume dropped more than 10% across the board, a clear sign institutions backed away from the market. We continue to see this market move sideways consolidating its most recent move. There just something not right about this market despite our continued rally. We are not about to argue with the market and fight it. Something just doesn’t feel right out there, but this is precisely the reason we have a cut loss strategy. Just because we may feel one way or another we could be dead wrong! We will not compromise our strategy because our feelings. Opinions are very dangerous and most often they keep you from squeezing every last bit from the market. We’ll stay with cash and a few long positions. Price will dictate our next move in either direction. Sentiment continues to be dominated by those who are neutral. The number of bears did slip to 27.35% according to the AAII sentiment survey. However, only 36.47% of respondents were bullish! How can this be? There are lots of reasons, but when the market appears to want to crack wide open rumors of Fed or ECB action always brings in short covering. It is what it is and fighting the tape is a futile effort. There are lots of reasons to be bearish and very few to be bullish, but when you boil it down all that matters is where price is moving. Tomorrow morning we’ll get a reading from Import prices and the release of the monthly budget statement. Like others, we are looking forward to the weekend. Make sure you get out there and enjoy the weekend.

4 New Issues Every Growth Investor Should Own

4 New Issues Every Growth Investor Should Own

PCLN Slides in Heavy Trade as VIX Continues to Slide

Today’s market action was not a bad day of consolidation for the overall market itself. However, we continue to see earnings disasters like PCLN and fear continuing to flee the market. Volume on the NASDAQ was above average, but below Tuesday’s session level. All in all, the NASDAQ put in an inside day on lower volume. This is precisely what you want to see the market react during an uptrend. However, how far can this market lift when you have the “fear” index sitting at just 15? There is a lack of fear in the market as sellers have completely rendered useless. Just concentrating on the market itself it does appear this rally can continue higher. We are in a new brave world where algo trading and HFT dominate the day’s trading. Without the public money pouring into the market how can this market uptrend survive? The VIX is at 15.32 at the close of the session and at these levels (in the past) the market tends to stall out and correct. Perhaps the computers have rendered the VIX useless and broken the back of the seller. Anything is possible, but it is no way to make trading decisions. Using price as your number one guide you can successfully navigate the market. In a computer dominated market the Federal Reserve continues to play a significant role in the psyche of traders. Hope is a dangerous emotion as it misplaces confidence. At this point, the only reason for optimism is the Federal Reserve conducting another round of easing. Ask Japan how constant easing has helped out their equity markets. Over the summer the Nikkei hit decade lows how is that success? Perhaps defined by a permabear multi-decade lows would be considered success. We will remain disciplined in our trading approach and we will not deviate from it. We’ll continue to take advantage of our opportunities and we are not about to gamble.

Russell 2000 and NASDAQ Lead the Way as Volume Jumps

A weak close once again dampens the day’s rally, but volume rises suggesting institutions have crept back into the market. Economic news will be light throughout the week and today wasn’t any different. By Mid-day the market had racked up good gains and volume was heavy suggesting the big players were active buying up shares of stock. While not overwhelming it is a good sign to finally see volume kick up showing institutions are somewhat willing to accumulate shares. We continue to see stocks move off of earnings releases and have been profitable. A good sign today and while we remain defensive we’ll need to see volume continue to flood the market. Summer time is not known for volume, but on solid price gains we’d like to see volume come in at least above the prior day. If we are lucky, we’d even take near the 50 day volume average. So far, we have yet to see such occurrence and more than likely due to HFT and Indexing. Many mutual funds manage to an index or better known as a benchmark. “Just buy the index” means just that and therefore you are seeing money chase after stocks how are in their benchmarks. The key is finding the stocks under accumulation and using proper entries and exits. Remember, you must stick with it to capitalize on the opportunity out there! Europe continues to be headline materials as Spain and Italy at some point will ask for a bailout. Economic news out of the Eurozone continues to be dismal. There isn’t any growth in the continent and now are relying on the ECB to bail them out. Same goes for the United States as many are expecting another round of Quantitative Easing. We may be rallying on hope, but it simply doesn’t matter. The mere fact we are rallying is all we care about. Reasons are pointless and by the time you have it all figured out the move will have passed you buy. Whether its bailouts from the ECB or the Federal Reserve printing more money at the end of the day it all boils down to price. Always have a plan! Know your entries, exits, and position sizing. All are vital to your trading success. Remember, always cut your losses!

Melt-up Monday Ends on a Sour Note as Summer Volume Continues

After coming off of an Economic news invasion last week the market gets a reprieve this week. Monday’s have been tough over the last 9 weeks closing in the red all 9 times. This Monday would be different closing in the green, but well off the highs of the session. The NASDAQ backed off the 3000 level while the S&P 500 reversed from 1400. While these are just psychological levels the sell off at the end of the day was not ideal. We’d like to see the market close strong on heavier volume. At the moment this market appears to be hyper focused on index securities and driven by high frequency trading. Our uptrend continues, but remains very weak with the lack of volume coming into the market. Friday’s market action was solid when you take a look at price action, but falls down when you take into account volume. We can continue to move higher, but there isn’t ANY accumulation in the market. Institutions are not accumulating stock at this time and it is very apparent when you look at volume. Without conviction we remain cash heavy in this market environment as it is difficult to have confidence to get size in any position. Trading with small positions here is key until the market says otherwise. It is quite amazing Mondays have been so dismal, but the market has been able to avoid taking out the lows. Since the last positive close on Monday the market was coming off the June lows, not highs. While it would be fun to speculate the market is about to change its behavior and move lower we will need price to confirm our stance. We have seen this market melt-up on pathetic volume and saved by possible central bank action and it would not surprise me to see another shock come into the system. How can the market rally in a sustained meaningful way when the VIX is sitting around 16? Anything can happen but logic says otherwise. It is very important to keep focused on being disciplined and sticking with your strategy. We are sticking to ours and look forward to when we have better market to operate in. The most important rule remains cut your losses, when you are wrong.

Big Wave Trading Portfolio Update And Top Current Holdings

This week marked a moment our model has not seen during a running six month period of time (this occurred in only four months, making it even more interesting), during the past 130 years. With the weak BUY signal in the Nasdaq switching to a SELL signal in the Russell 2000 on Thursday to a NEUTRAL signal on Friday, it marked 11 model switches to BUY or SELL in a row without a 5% gain. This has never happened before in 130 years and indicates that we are definitely in a market environment similar to 1937-1941 on the DJIA and 1976-1979 on the SP 500. The price pattern is more similar to 1976-1979 but the volume is more similar to 1930-1933 and 1940-1942 on the DJIA. This, therefore, automatically shuts down our model on the next signal and now prevents any new position to be of any size what so ever until a trend develops. I have stated before and I will state it again, there is no other time period ever in the history of the stock market where you can find the stock market rally on below average weekly and monthly volume (50 day volume average) for a prolonged period of time. All lower volume rallies before this one have ended in one or two ways. They either reverse and give back all gains or they lead up to a higher volume rally. Normally, those low volume monthly rallies only last one or two months before the real volume enters. The current rally has been on below average volume since 2009 (the entire way–not one above average volume UP month) on the DJIA and SP 500 and 2010 on the Nasdaq. So this low volume rally is too far into the trend to have that happen based on history. However, this being something completely different than ever before, could lead to it happening. This market is doing things it has simply never done before so why not. This situation, along with a high unemployment rate and a 1.5% GDP, is preventing any upward momentum from being generated. At the same time, without any more threats of QE or Operation Twist, we believe the market would be 50% lower from the current levels (based on removing all market rallies that either came before an FOMC day or on a day where easing was announced). The market is lifting higher due to inflation of hard assets. This is not good for trend followers on the long side or the short side. The real profitable trend lower will not be allowed to materialize with the Central Banks interference. And the long side trend will be small and choppy thanks to low interest rates and the aforementioned items above. Another thing that bothers me are the low VIX and sideline activity by AAII and Investors Intelligence survey members. The VIX is already at low levels so its hard to believe any real new uptrend will start here. However, the fact the VIX fell on Thursday when the market fell indicates that it could be temporarily broken. Also, there are more people on the sidelines than there are bulls or bears. This prevents extreme pessimism or optimism from forming thus preventing a major move in the opposite direction. Overall, it is a market where intermediate term trend following methodologies continue to be hindered and we find it safest for our assets that we just be on the side playing extremely small until we can get volume confirmation across the board. What will that confirmation look like? A significant move one way or the other on well above average volume on the indexes, ETFs, leveraged ETFs, inverse ETFs, and individual leading stocks. As long as confirmation is not across the board, Big Wave Trading will stay small until a “perfect” setup comes along. We have not seen a perfect setup that worked since February (one perfect and two near-perfects on the long side failed since) on the long side and we have not seen one at all since March on the short side. Until these show up, we are going to take it easy and wait for the right moment to begin operating at a higher capacity. Protecting our capital remains goal one in this trendless tape. The only play that is consistently working is our earnings gap plays. Up or down, it doesn’t matter as long as it is due to some earnings surprise and volume is at least 50% of average daily volume in the pre-market session. Besides that, buying every single dip hoping that the Fed will save you has worked also. That is not exactly my personal style. I am patient and will only risk the capital when the money is sitting in the corner waiting to be taken. Aloha and have a great weekend! Top Current Holdings – Percent Return – Date of Signal AVD long – 88% – 1/10/12 BVSN short – 82% – 3/19/12 PRXI short – 35% – 3/30/12 MAGS short – 33% – 4/18/12 CLGX long – 32% – 6/19/12 CAMP long – 31% – 4/26/12 AXTI short – 26% – 7/19/12 PHMD short – 26% – 5/11/12 STX long – 25% – 6/29/12

ECB’s Draghi Fails to Impress Sends Europe Lower along with US Stocks

All eyes were on the ECB rate announcement and following press conference. Unfortunately for European stocks and yields the ECB did not deliver what the market expected. First, it was Ben Bernanke and the US Federal Reserve not announcing QE3 and now the ECB failing to deliver buying bonds outright. Initially, the NASDAQ received a ton of support in the morning session and appeared to be on its way higher. However, as the European markets dove to new lows prior to the close US stocks simply couldn’t hang on to the move off the lows. The final hour we did see support, but buyers simply could not push the market back above the unchanged level. Now the market awaits the July jobs report and it too will be a market mover. Last week’s rally into the end of the week has yet to see any follow-through at all. In fact, we are down four straight days. Not typical of a new uptrend and just another sign of the chop and slop summer trading has been this year. Who knows what tomorrow’s jobs number will bring but the most important piece will be how it reacts to it. CNBC will have its pundits rolled out ready to bring as much noise to the table as possible. We’ll pay attention to how price reacts to the news and follow our disciplined approach. We’ll leave the guess work to the amateurs. This week’s AAII sentiment survey was released showing the number of bears coming down from the low 40s to 35%. Bulls moved back above the 30 level, but those who are neutral in the market continue to dominate this sentiment reading. It is easy to why the VIX is so low showing a lack of fear. We can just point to how many of those who are neutral. If you are in cash how can you be fearful? We now have the Fed and ECB out of the way and the jobs report tomorrow it will be nice to enjoy a summer weekend! We remain cash heavy at this point in the game with the level of chop in the market it has made it really difficult to hang onto positions. Keep it small until you see gains pile up. Always cut your losses short and enjoy the weekend!

Fed Chief Says No to QE and Stocks Respond by Closing Lower

Leading up to the Federal Reserve rate annoucement was the big story was the software glitch hit by Knight Capital. Gigantic volume struck the NYSE causing very erratic trading in nearly 150 stocks. Just when confidence in the stock market is grim we get another flash crash incident. At least the news story distracted the majority prior to the Fed Announcement. Disappointing the market the Federal Reserve failed to deliver a new quantitative easing program. NASDAQ and Small Cap stocks lead the market lower with the Russell 200 finishing down more than 2%. It certainly doesn’t help when Knight Capital is down more than 33%, but small cap weakness continues. Preliminary volume indicates the NASDAQ was able to avoid a distribution day despite the losses on the session. Not a great day for bulls as the market will be hyper-focused on the ECB tomorrow before the opening bell. While the markets closed up lower the VIX failed to rally to show fear amongst sellers. The VIX has not been signalling any fear in this market. Today was no different despite the market not getting another round of QE. The lack of fear in the system can mean many things, but one thing it tells us upside will be limited and any large gains are a ways away. In addition to VIX, bond yields lept and closed higher after the Fed announcement. Rising bond yields and falling stock prices aren’t usually a norm. Sure, rising bond yields are a negative for the government and its financing activities. For stocks, from a historical view rising bond yields have been a big positive for the markets. While today may be an anomaly, it will be something to pay attention to going forward. Now it is onto the ECB tomorrow and then the July jobs report on Friday. More fireworks are set to hit the market and we’ll be ready. Remember, rule number one of cutting your losses!

For the Second Straight Day Stock Pull Back Ahead of FOMC Announcement

The day kicked off with decent economic numbers as well as consumer confidence figures. The Chicago PMI was better than expected and after a bout of disappointing economic releases last month. This was a bit of good news albeit not great. However, stocks weren’t able to hang onto to gains as sellers took hold of the day. Volume ran higher throughout the session, but end-of-month rebalancing kicked it up quite a bit at the close. Finishing near the lows of the session, but unlike previous sessions the losses weren’t that bad. Heading into tomorrow’s Federal Reserve rate announcement the market is clearly expecting another round of quantitative easing and will be certainly looking for the central bank to deliver. For our trading it does not matter much whether or not the Federal Reserve decides to monetize our debt further. We only care about trends and if we get one we go with it. Sure, a policy debate can be made the Federal Reserve is simply kicking the proverbial can down the road. In reality, our trading relies on price action rather than opinion. Even if the Federal Reserve does announce a new money printing scheme does it guarantee the stock market goes higher? It will certainly help out precious metals and commodities, but there are no guarantees. Follow the price action and know your exits as you can possibly figure out how prices will react to any news. Yesterday’s commentary I briefly mentioned sentiment. Bill Gross the self-proclaimed (unconfirmed) Bond King penned an article claiming stock returns are essentially a Ponzi Scheme. He may be right or wrong, but aren’t Treasury Yields essentially the same thing? Social Security, while not illegal by the government standards relies on the same fundamentals. You need more investors to pay off current ones. A big reason Social Security will run out of money (other than Congress stealing from its coffers) is there will be more retirees than those paying into the system. Social Security does not pay out on the profits it makes from investments, but from the new ones who are paying into the system. Regardless of the topic at the end of the day, a bond guy writing an article about stock returns (mind you, PIMCO just recently opened an equity arm) is quite interesting here. Hidden agenda? There has been research regarding bond yields and stock returns. Interestingly enough a rising bond yield correlates well with a rising stock market. Why? As bond prices fall (people selling) the capital flows from bonds to equities. It doesn’t take a rocket scientist to see the correlation there. Since 2008 we have seen an unprecedented amount of cash flow into bonds and outflows in equities. When will this trend break? If and when the trend does break will capital flow to stocks? The answer lies in trend following and with Big Wave Trading. Tomorrow’s Federal Reserve meeting will bring on an exciting afternoon. Have a game plan and trade it. We’ll be enjoying the fireworks as others scramble to get into positions.

Stocks Take a Step Back in Quiet Session

For the 9th Monday in a row the market closes lower on very light volume. After Thursday and Friday’s trading sessions today’s pullback is a welcomed sign and a very bullish one. The Russell 2000 led the decline with the NASDAQ not far behind with losses of .56% and .41% respectively. The key point here was volume did not accelerate with the selling and dried up on the day. Institutions were not dumping stock today and for now a good sign heading into a fun filled central bank week. Wednesday the Federal Reserve kicks off the news week with their rate announcement in the afternoon. Tuesday we have a few economic releases, but the focus will be on Wednesday and would expect another day similar to what we saw from the market today. I am not trying to predict what will happen tomorrow, but merely pointing out volatility kicks in after rate announcements. We’ll be focused on the price action of our stocks rather than guessing where we may go from here. Sentiment continues to be quite negative. AAII Bulls have dominated the survey has of late and II bulls continue to disappear. Any interesting poll came across CNBC today and one that asked if the current rally was going to continue. 71% of respondents thought it was going to be short-lived and we’d head lower. Mind you this is CNBC whose job is to pump stocks and it was quite astonishing their viewers are that bearish. Is it that the investing public is too bearish on this market? Time will tell and so will prices. Today was much of a do nothing day. A very boring day, but one that was a good step forward for our buy signal.

Big Wave Trading Portfolio Update And Top Current Holdings

Big Wave Trading remained under a NEUTRAL condition all week, until Friday. The NEUTRAL condition changed around 1:15pm EST when the market blasted higher following an already strong uptrend throughout the day. The move on Friday was more than 2% on the Nasdaq and volume was higher than the day before and above average. That is exactly what we wanted to see to have confidence in any BUY signal. Sadly, there have been so many recent switches in the model that, under our current state of affairs in the market, we can not press like I would want to at this juncture. There was not a severe wash out, there was absolutely no fear in the VIX, and the II survey did not see bears ever take out bulls during the most recent pullback. We are at such low VIX levels that it is hard for us to see how any rally can create substantial gains from these levels. There will be stocks that overall do well compared to the market but these stocks will not be able to produce any meaningful gains with the volatility so low in the market. Still, there are plenty of stocks moving but sadly they are moving in one day. If you backtest leading stocks going back 130 years you will see plenty of breakouts where you have time to get in the following day or on a pullback. In 2012, that has been basically impossible as all high quality stocks seem to move 10-30% in one day zooming well beyond their pivot point making any new long position a pipe dream. The most extreme example is a non-CANSLIM thin stock. DWCH. That 30% move in one day is impossible to buy, unless you were on it intraday. Other more rational examples involve a stock I have tried to go long for weeks but every time it moves it moves 8%+. SSYS. I can not chase these one-day moves in a tape that is so unfriendly to trends. A reversal per QCOR or WWWW seems to be the pattern when you chase. Very few can do a MLNX. We are heavy cash but have been able to increase our long exposure the past week as we are in the black in 6 out of our 7 last long positions. All we need now are clean breakouts or perfect moves (price, huge volume, max-green BOP) to go 10-25% long a single position. More follow-through to today’s gains would be confirmation to look for additional pocket pivot point buy signals in CANSLIM stocks that have already broken out to new 52-week highs. We have a good possible uptrend setting up here. We will just need to see more follow-through and make sure we do not reverse this move next week. This is still a market held hostage by government interference and it will not change until we know they are going to get out of the way. The best indicator we saw today that this rally could have legs is that money came out of bonds across the board on Friday. Nobody knows if this is going to be a one day pattern or a trend change. If it is a trend change, that bodes well for equities. The future is unknown but for now it appears it could be a good week next week. Let’s see if we can get some follow-through and bust out of this trading range we are still in. Yes, we are still in a trading range. From May 4th to Friday, the Nasdaq has moved a whopping +0.06%. Aloha and have a wonderful/fun weekend! Top Current Holdings – Percent Gain – Date of Signal BVSN short – 82% – 3/19/12 AVD long – 65% – 1/10/12 PRXI short – 38% – 3/30/12 MAGS short – 36% – 4/18/12 CAMP long – 34% – 4/26/12 CLGX long – 32% – 6/19/12 ZLCS short – 25% – 6/19/12

Its Quantitative Easing or Bust

It is quite clear the market is waiting for the world’s central banks to print more money. Futures were heading lower along with European markets when the ECB’s Draghi issued comments about saving the EURO at all costs. Translation: they will print EUROs. The stock market’s reaction to Draghi’s comments were positive as price gains were strong on above average volume. End of day action wasn’t ideal and the S&P 500 was the only index to look ideal. However, what a difference rumors of quantitative easing will do for the market. There isn’t something quite right with this market, but with the hint of further easing the market will continue to trade wide and loose. Earnings season has not been kind as we are on pace for a very disappointing earnings season. While we are very price driven we focus on growth stocks. Unfortunately, without growth in fundamentals our universe of stocks shrink and this is the current situation we are in. The lack of growth in the market on the fundamental level has us seeing a narrowing universe of stocks. Not to mention this earning season has destroyed a few of our leading growth names. We can always hope the miracle of quantitative easing will save our stocks and set off another rip roaring rally. The AAII survey continues to lean towards the bearish side of things. It is easy to see as why the folks answering the survey are bearish. Earnings season is not spectacular and economic news has NOT been good. June’s PMI were very negative and recent home sales both pending and new have been disappointing. Manufacturing data has not been signaling growth, but contraction. Outside of quantitative easing there isn’t much to be bullish on. The next FOMC meeting is next week and on Wednesday they will release their policy statement and rate decision. We’ll focus on price and follow our rules while the rest use discretion and opinions to navigate this market. Tomorrow’s GDP report will set off fireworks for the market. Sit back and enjoy the ride! Have a great weekend.

Industrials Lead the Market on the Backs of BA and CAT

Stocks end the day on a sour note with action dominated by reaction to earnings. Economic news from new home sales did not help matters, but dip buyers were on the prowl. BA and CAT helped the Dow Jones Industrial Average lead the way while AAPL weighed on the technology heavy NASDAQ. Remove earnings from the picture and you are left with a pretty dull day of trading. Despite the mixed results from stocks the VIX fell on the day as fear left the market once again. Ben Bernanke’s Federal Reserve put on the market seems to keep this market from falling apart. When you boil it down today was simply a “nothing” day. Last hour of trading saw the NASDAQ move from its high of the day right back to the mid-point of the trading session. Yesterday’s last half hour of trading was supported by rumors of the Federal Reserve taking action sooner rather than later. At this point, how much more can the Fed do? Is another round of QE going to do much of anything? Rather than hand out another $400-600 billion to banks why not hand out $5,000 to every taxpayer (those who paid taxes) making under $250,000? Would that not help solve the problem? At this point, the banks have been bailed out enough time for the consumer to get something! By the way, while giving out free money may sound good in reality it is a terrible idea. It is a short term fix that solves very little for the long haul. It is highly unlikely we’ll see either the Federal Reserve or Washington DC do anything that would solve our fiscal issues. Money printing prolongs the agony and DC simply cannot agree too much of anything. At this point, the market believes in the Federal Reserve put and you see it whenever there is a rumor regarding action. We’ll focus on the price action of the market and the stocks we follow. Price action continues to favor the weak side at the moment and until we get a big volume move in either direction we are playing it safe. Always make sure you know your exits to both winning and losing trades. Enjoy the market tomorrow!

Stocks Fall on Higher Volume; AAPL Dives after Reporting Earnings

A terrible Richmond Federal Reserve Manufacturing index reading helped set a negative ton for the market. Volume jumped on the day as turnover picked up as sellers gained control over the market. Volatility jumped as fear appears to be settling into the market, but the index remains just above the 20 level. Despite the selling all the attention was going towards AAPL and its earnings release at 4:30 PM EST. Big selling today on volume today as the Dow Jones Industrial Average and NASDAQ Composite both lost their 50 day volume average. It appears the trend may be changing and the market is about to head lower. AAPL reported earnings this afternoon and the market did not like what it heard. The stock closed the after-hours session down more than 5.5% on big volume. It is such a big portion of the NASDAQ and NASDAQ 100 it will have a huge impact at the open tomorrow. AAPL was such a large part of the rally from December and if the stock falls here it will drag the NASDAQ down along with it. At the moment it appears AAPL wants to head lower. Other stocks posting earnings in after-hours were NFLX, TRIP, and BWLD. All were down double digit percentage wise. TRIP and BWLD had been holding up and consider leadership. NFLX was a former leader and continuing its decline. The troubling aspect is TRIP and BWLD heading lower. TRIP’s earnings reaction took down PCLN, but PNRA was able to shake off BWLD’s earnings and jump in after-hours trading. Leading stocks continue to look weak and their reaction to earnings are not inspiring confidence. Earnings season has not been kind to the market. We have had some bright spots, but not enough to overshadow the disappointments. If we simply ignore the noise from market pundits and their opinions we can see a market on very shaky ground. Monday’s session we saw the NASDAQ get support at its 50 day. Support at the 50 day is usually positive, but today’s reversal and falling below the moving average with volume is all but positive. Just looking at the facts presented in front of us and it appears this market wants to head lower. If we are wrong we cut our losses. Bulls will be hanging on to dear life and hoping the plunge protection team saves the day.

Big Wave Trading Portfolio Update And Top Current Holdings

“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 “I’ll keep reducing my trading size as long as I’m losing… My money management techniques are extremely conservative. I never risk anything approaching the total amount of money in my account, let alone my total funds.” -Randy McKay The Big Wave Trading Portfolio remains under an extremely weak BUY signal that was triggered on 7/18. The signal was so weak that not a single ETF or leveraged ETF position was initiated. Instead it was a signal that we could increase the size of our new long positions. However, that was not allowed to happen as the most recent long position did not move higher and thus an increase never occurred Thursday or Friday. Following Friday’s sell off on heavier volume, the extremely weak BUY signal is under severe pressure and a move below the 2904.24 level on the Nasdaq will switch it back to NEUTRAL. The Big Wave Trading portfolio did not have a good week, losing 1.5% bringing us to a -5.5% return YTD. Some may choose to hide from their losses. We would rather tell the truth and bring to light how seriously difficult this current market environment is compared to 1995-January 2011 markets where trendless periods were not nearly as long or complicated as what has occurred the past two years. This period of underperformance coincides directly to volume drying up on the indexes and contracting on the weekly and monthly time frames. Protecting capital continues to be the name of the game. Our returns can be compared with other trend following system traders here. One interesting note is how closely correlated the trading has been the past 100 days to the same 100 day period in 2011. If history is going to repeat itself in back-to-back years (something you almost never see) then we should expect the beginning of a severe sell off starting some time next week. I am not saying it will happen. It is merely an interesting historical talking point. The one trade that has been working is going short stocks that gap down in the morning following releasing earnings statements. Going short in the morning and then covering at the EOD has been a high reward/low risk methodology since earnings season started. With guidance not coming in too rosy, you would think, that this data combined with our macro data and action in the overall stock market would mean a market pullback is just around the corner. A lot of things are lining up. Sadly, reality is held hostage by the Federal Reserve and other world banks. Another round of printing can start at any moment. While it is unfortunate the system is not an open free market anymore, it is the environment we are in. We are going to just have to deal with it. When the market does crack on strong volume, I am sure trend followers are going to make a lot of money. I have a feeling the sell off, when it does start, is going to last longer than just a couple of days. But what do I know. The only thing we care about is price. If it is moving in our direction, it is wonderful. If it is not moving in our direction, it has to go. Big Wave Trading continues to cut losses extremely quick when we are wrong. We were giving new recent long positions more room to work, as they were producing gains, but Thursday’s negative divergence in advancers to decliners followed by Friday extremely poor action on heavier volume is our clue to go back to being extremely defensive with stocks showing us losses or not moving at all. Losses will simply not be tolerated. If it shows a loss, some of it has to go. No matter what. Aloha and have a great weekend everyone! Top Current Holdings – Percent Return – Date of Signal AVD long – 78% – 1/10/12 BVSN short – 78% – 3/19/12 MAGS short – 33% – 4/18/12 PRXI short – 33% – 3/30/12 CAMP long – 28% – 4/27/12 PHMD short – 28% – 5/11/12 ZLCS short – 25% – 6/19/12

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.

Fed Chief Does not Signal QE3, but the Market Disagrees

Despite a better than expected Housing Confidence Index it was all about the Fed Chief. Chuck Schumer said it best and it was what got the market off the lows. He basically stated that DC will not get its act together and the Federal Reserve must act. From that point forward the market moved off its lows as volume surged in the market. Regardless of your view at this point the market wants to move higher in the short term. Late day selling did put a cap on the day, but the overall gains in the market certainly paints a bullish tint. Until we get further selling, this market wants to move higher. The market clearly expects quantitative easing to help support it going forward. It is quite sad that this market needs the fed to print money to support this market. Earnings season has not been stellar and many stocks have missed their estimates. At this point, we cannot ignore the price action simply because we think the economy is in a tail spin. For now, this market wants to move higher and we’ll be moving along with it. Do not fight the trend. Ben Bernanke moves from the Senate to the House tomorrow where he’ll face even more questions from Congressmen/women. Unfortunately for Ben, he’ll like face the same lame questioning he received today. Majority of the questioning was grandstanding by both parties and did not ask any very pointed questions. Essentially, what we got today was Congress and the Senate will not do anything and they expect the Federal Reserve to print away their problems. Elected officials are terrible and Schumer pointed the problem out. The trend is your friend and do not forget it. Tomorrow may bring a change in trend, but for now this market wants to move higher on the high of quantitative easing…part III. Do not fight the trend no matter how much you believe you are right. This is precisely why we cut our losses. Ride the trend higher and get off when the trend reverses. Big Wave Trading is your guide.

New Seeking Alpha Article

Four Medical Stocks Moving In A Trendless Tape.

Retail Sales Disappoint as Tensions in the Middle East Grow

The market was showered with very disappointing retail sales figures showing the consumer cooled quite a bit in the month of June. NYSE volumed dried up significantly, but at the same time NASDAQ volume moved nearly 6%. While the NYSE indexes escaped distribution the NASDAQ did not notching its 4th distribution day over the past few weeks. The day’s action was a decent day of consolidation over the 50 day, but with distribution quietly piling up on the NASDAQ the Big Wave Trading Market Model remains neutral. Outside of earnings the market will be looking towards Ben Bernanke’s comments on Thursday. Ben Bernanke will focus mostly on the United States fiscal issues and how Europe is constraining growth. However, many traders will be looking for the Federal Reserve Chairman to talk about a third round of quantitative easing. While he’ll touch upon the subject it will be interesting to see the aftermath of his testimony. Will Ben Bernanke say QE3 is on the table and the Fed is ready to implement it? Time will tell and we’ll be ready to react. In the Middle East an interest development occurred today and that was a US ship firing upon an Iranian boat. The market did not react to much other than crude oil moving higher closing higher than a dollar a barrel. While we aren’t about to make any decisions trading based upon the idea we are going to war with Iran, but from an observation it does feel like tensions are rising. We remain disciplined in our approach, but it will be interesting to see if we get any further developments out of the Middle East. At the very least it will provide us with some fireworks. Earnings season is underway and while it has been a somewhat disappointing season so far we have the bulk of reports coming over the next few weeks. Stick to a disciplined approach: trend following. Know your exits!

Big Wave Trading Portfolio Update And Top Current Holdings

It was another summer-time trendless week, this past week, in the stock market. The decline on Tuesday switched our weak (10%) BUY signal to a NEUTRAL signal. The weakness that followed on Wednesday and Thursday was not enough to switch our model back to SELL as volume was below average and late day rallies took prices off their lows. On Friday stocks rallied but did so on the lowest volume of the week for the Nasdaq. Therefore, we remain under a NEUTRAL signal at Big Wave Trading, holding an extremely large amount of cash. Cash levels are at a point that has not been seen since late 2007 and early 2008. Everyone knows what happened post Q2 2008. This is to not say that will happen this time. Predicting the future is not our game, since it is 100% impossible to do. It is just a recent historical observation. Our game plan is clear. We are waiting for an above average volume breakout to the upside or downside. Once we receive that signal, we will invest accordingly. We are prepared for a rally, a sell off, or more sideways action. New positions continue to remain small, as historical signals that made significant gains in the past continue to throw off false signals. This amount of false signals has never occurred before in my career, spanning from 1996-now. Therefore, we get smaller and smaller and will remain small until our new positions start producing more and bigger wins to fewer and smaller losses. Recent Biotech, Small Banks, and REIT longs have done very well for us lately but they are not producing the gains I want to see right after initiating a position. Nothing is producing huge gains and it is 100% correlated to the overall market. This should surprise no one as 3 out of 4 stocks follow the general trend of the market. When the trend is trendless, you get weak moves. From February 3rd to Friday, the Nasdaq has moved 0.10%. From May 9th to Friday, the Nasdaq has moved -0.89%. Not quite a trending market, huh? This period will end. Hopefully, it ends faster than the 1976-1979 trendless market ended. If it doesn’t, it is not a big deal because there will be short trend burst here and there (think of July to August 2011, the Flash Crash of 2010, and the uptrend from September 2010-February 2011). During the trendless periods, we will continue to reduce our exposure as new signals fail and cut losses much faster and not give stocks room that we would normally not cut as fast and give more room to work in a trending market. Maybe we will get some movement next week. If we don’t, that is fine with me. Why? Because I can not control the stock market. I can’t make it do what I want it to do. The only way to be at peace with it is to let it do whatever it wants to do and subsequently not get greedy trying to ask it to produce a big uptrend or downtrend right now when it simply is not. If you want to beat today’s market and continue to beat today’s market year after year decade after decade, you have to be OK with whatever the market does in the now, even if you don’t want to. Enjoy the weekend! Aloha! Top Current Holdings – Percent Return – Date of Signal AVD long – 96% – 1/10/12 BVSN short – 77% – 3/19/12 CAMP long – 32% – 5/4/12 VRNM short – 31% – 4/10/12 WZE short – 29% – 4/10/12 MAGS short – 28% – 4/18/12 PRXI short – 27% – 3/30/12

Stocks Have a Wild Ride Close Lower

Earnings season has not been kind to stocks and it kicked started the market to the downside. Europe’s markets were selling off as the EURUSD fell below 1.22. Selling was intense, but backed off as buyers stepped up. The NASDAQ sliced through its 50 day moving average while the S&P 500 was able to hold above its 50 day. Volume rose on the day across the board as another distribution day is added. The last 15 minutes of the session was met with sellers trimming a good portion of gains seen since the morning lows. Today’s action was not terribly bullish despite coming off the lows. We remain cautious here. Stocks like PG and WMT were helping out the Dow Jones Industrial Average move higher. The Dow was the index holding up best today is a key sign investors were moving in a defensive manner. We do not believe a market lead by the Dow will be one that produces a strong move to the upside. Our leading stocks continue to look weak and are not inspiring much confidence in this market. We’ll stick to our rules and await our signals. Interesting headlines hitting the wires tonight with Italy being downgraded two notches by Moody’s and China’s GDP growth figure. Italy’s news is not really surprising to me, but I’d argue its rating should be junk. Remember when most investors were duped into thinking the Greek’s would meet their obligations? When all is said and done Greece is likely to have all its debt liquidated leaving bond holders high and dry. Will Italy and Spain be any different? Certainly just as big will be whether or not China is slowing more rapidly. Then again, can you trust what it prints for GDP growth? Too much speculation to gamble money on, but is an interesting intellectual debate. Remember leave the investing to a rules-based system rather than an opinion! If I had to guess tomorrow we’ll see stocks climb higher and close in the green. Then we can get headlines into the week the indexes snapping its losing streak. Investing based upon this would simply be gambling. Trade your plan and leave out the guess work. Have a great weekend and get out there and enjoy life.

Energy and Financials Hold up the S&P 500

The S&P 500 and the NASDAQ are barely hanging onto their respective 50 day moving average as the Federal Reserve meeting minutes fail to spark buyers or sellers from jumping in with both feet. Crude oil was the big story on the day with the commodity jumping more than two points helping out the energy sector. Saving the S&P 500 the energy sector gained more than 1.4% on the day while the financial sector gained nearly .8%. Without the help from these sectors the S&P 500 would have sunk hard. Leading stocks continue to be sold off as another signal of weakness in this market. The market was able to overcome some selling after the Fed minutes and is a slants to the positive side of things. Big Wave Trading market model is neutral and we’ll need to see a big volume push to either side to get us in either direction. Volume was mixed on the day with surprisingly volume higher on the NYSE and lower on the NASDAQ. As of late we have seen the opposite situation where NASDAQ had seen the volume come in higher, but NYSE lower. Perhaps today may signal a change in the recent short-term trend (down), but it is hard to get too excited when leading stocks aren’t the ones showing the support. It appears the market is ignoring the lack of commitment currently from the Fed to do QE and wants to push higher. We aren’t about to guess where the market is heading next and we’ll continue to follow our rules based trend following system. Tomorrow morning the ECB will come out with a few items and it appears the market is expecting them to talk about increasing the fire power of the ESM and EFSF and LTRO. These are all short-term fixes to a long term problem. Unfortunately, for the Euronations they need to swallow the hard pill Estonia and Iceland did to recover from this problem. Defending the status quo will always lead to a bigger problem down-the-road. Our focus remains on following our rules and pushing forward regardless of the direction the market takes us in. While we may have opinions they aren’t mixed in with our trading. Rules based systematic approach to trading stocks is our niche to beating the market.

Volume Jumps as Leading Stocks Slump

A big distribution day strikes the market, but the real story is how leading stocks fared in today’s session. While we can focus on INTC, AA, or CSCO the real story is how leading stocks acted today and what they are foreshadowing. Distribution days happen in uptrends and are quite normal. However, today’s action in leading stocks foreshadows a very bleak picture for the market ahead. While AAPL price wise held up okay volume was much higher suggesting sellers are winning the battle. Our major market averages are above their respective 50 day moving averages, but it does not appear underneath it all things are looking good. One major leading stock happens to be QCOR and today’s reversal after yesterday’s big point gain smells quite FISHY! Other leading stocks like ISRG, PCLN, FOSL, CMG, and LULU are breaking down and are not playing nice in the sandbox. This action usually spells out trouble for the market even though our distribution day count is low. It is never a good sign when your leading stocks get pounded and is often a sign for more trouble ahead. Tomorrow will be an interesting day in an option expiry week. We get the FOMC meeting minutes from the most recent Federal Reserve Open Market Committee meeting. I am sure the market will be itching to see if the Fed talked about further bond buying or what we like to call MONEY PRINTING. Quantitative easing or money printing or monetizing debt which ever you prefer is something the market has been hoping on. We’ll see if the Fed talked anything about more bond buying. At this point, what else will it do other than monetize our debt and make us become more like Japan? For now, this is all speculation and the action we are seeing is quite negative for the market. There are many headwinds facing this market and many of them are known. However, what the media calls “headline risk” is simply a non-factor for trend followers. We follow price not what Mandy says on CNBC is breaking news. Cut those losses.

AAPL Keeps the NASDAQ Afloat as the Market Aways Earnings Season

Coming off a holiday week stocks ended slightly in the red with volume coming in higher across the board. The Dow Jones industrial average along with the NYSE composite both notched distribution days, but the NASDAQ and S&P 500 skirted distribution. AAPL was certainly a star of the session despite volume coming in lower for the stock. Today’s action comes as no surprise to us as many market participants were coming back from vacation. The market clearly is waiting on earnings and first up to bat is Alcoa. We are still in a weak buy signal and we’ll continue to act accordingly until the market tells us otherwise. It is nice not having the troubles in Europe dominate the talk on the air waves. Well, there was some talk, but not the pounding on the table many have been doing nowadays. Attention is now being drawn towards earning season and it will be interesting to see how the market reacts to the many companies reporting on their earnings. NKE and F are two examples of where the global slowdown is clearly hurting them on the top and bottom lines. We’ll sit back and where we need to take action we will and will not be guessing on the direction of stocks will take prior to earnings. We follow trends and certainly do not guess where they may happen next. Alcoa reported better than expected earnings and revenues after the market close. It reaffirmed its guidance for demand, but has yet to express any global growth. The stock was up more than a percent after releasing earnings, but now is hardly above where it closed. AA is not typically a name we’d like to get after since it isn’t a growth stock, but from an economic stand point it is a barometer. The lack of oomph in the after-hours session is quite puzzling and while we aren’t going to act upon it we can certainly ascertain something isn’t quite right. Earnings season has officially begun and let the games begin! A few leaders held their ground while another was unable to hold a key moving average. Both V and MA traded down to their 50 day moving average. Finding support, both stocks were able to hang above their respective 50 day moving average. On the other hand, LNKD was unable to hold its 50 day average. While volume was not above the average volume, it was the most volume seen by the stock since the day the Russell indexes rebalanced. The stock has been climbing on tepid volume and today’s action doesn’t bode well for the stock going forward. Remember to know where you are going to sell out of a position! Cutting your losses is your number one priority. Profits take care of themselves, but losses never do.

Big Wave Trading Portfolio Update And Top Current Holdings

Big Wave Trading remains under a weak BUY signal (10%) generated on June 29th. The past week was a very inactive week for us with only a few long signals generated (all on Monday). We continue to be in a trendless intermediate market period. From February 3rd to July 6th, the Nasdaq has moved a whopping 1%. From May 9th to July 6th, the Nasdaq has moved 0.09%. The market remains trendless in a range bound trading range. Outside of the Biotech, Regional Banks, and Homebuilders sector, there really is not that much that is blowing me away in individual stocks. The wedging low volume breakouts in leading CANSLIM stocks simply do not interest me in an overall low volume tape. Historically, it is a very risky trade. Over the course of the past three years it has become a higher odds trade due simply to the market being manipulated higher via the printing press via QE1, QE2, Operation Twist1, Operation Twist2. Still, this is a trade (low volume moves) I will not take unless the chart pattern is tight. There are a lot of stocks still building solid bases out there that puts the odds in favor of breakouts. But at the same time, there are price/volume flaws with a lot of these patterns like PCLN, AAPL, GOOG. They have heavier volume on the left side of the base when selling off and lower volume on their current right sides as they rally. This is the opposite of what you want to see, historically. However, in this new world we live in, it could very well work. This is why price is king. We will continue to focus on price at Big Wave Trading, waiting for a stronger BUY or SELL signal. The current signal is weak and needs strength confirmation before we can even think about getting 50% of our portfolios invested on the long side. In fact, the signal is already coming under pressure thanks to the “technical” distribution day on the Nasdaq on Friday. It was a technical distribution day because we were down on heavier volume. However, the intraday reversal was bullish. Therefore, the overall session can be taken away as a positive for the bulls. Overall, this means we are like Switzerland here. We are under a BUY signal but we are very neutral in that our team both see an equal amount of positives and negatives out there. There is no real clear upcoming direction we can attempt to forecast at Big Wave Trading due to the mere fact of there being so many cross-current data coming in from the micro and macro front. It is very much a waiting game. At least it is summer time. I know it is hot on the mainland but it is perfect on Maui and the waves have been big and strong for this summer. If this is what global warming is all about then I am all for it. That is until it hits my pocket book at the grocery store thanks to all the damaged corn, grain, and other ag crops. Aloha and have a wonderful weekend! Top Current Holdings – Percent Return – Date of Signal AVD long – 90% – 1/10/12 BVSN short – 76% – 3/19/12 CAMP long – 34% – 4/26/12 VRNM short – 31% – 4/10/12 PHMD short – 31% – 5/11/12 WZE short – 26% – 4/10/12 MAGS short – 25% – 4/18/12 ANGI long – 25% – 5/31/12

The Market Awaits the Jobs Reports as AAPL Moves Higher

There was a whole host of news for the market to digest this morning from the ECB rate cut to the Chinese cutting its rates. The ECB did not increase the size of its bailout mechanisms despite the cry for more. We did get somewhat good news with the ADP report showing 176,000 jobs were created in the month of June. Unfortunately, only 4,000 were manufacturing jobs. Jobless claims were better than expected, but failed to ignite any excitement over the employment picture. Another disappointing ISM release this time in the non-manufacturing space showed the service sector grew less than expected. While the NASDAQ was able to get off the lows of the session late day sellers knocked the index to close flat. This market awaits tomorrow’s jobs report and we remain in a buy signal. AAPL was a big part in the success of the NASDAQ Today jumping more than 10 points. News of a smaller iPad certainly helped buyers to jump back into the stock. Volume was above average today, but it was the first time since May 22nd did the stock experience above average volume. The recent move has been in light volume and while the gains have been nice there isn’t anything screaming about institutions buying this stock hand over fist. We won’t argue with the gains, but something to keep an eye on as this market moves forward. The lack of volume on the upside isn’t anything new for discussion, but an interesting development is with the AAII sentiment survey. Bears dropped 9 points, but it is the lack of convinction from either side that is interesting. Bulls and bears are at 33% a piece with 34% of respondents neutral. Traders are going the way of Switzerland and not chosing any sides. Trend followers do not care which side of the market we need to be on we just go there. However, the neutral bias continues to be a common theme with sentiment these days. This entire rally has been on the back of the Federal Reserve Bank coming up with a new bond buying program. Ben Bernanke was all over this question in his last question and answer session saying unemployment was a key indicator for him and the fed. Tomorrow’s unemployment figure, expected to be at 8.2% was the indicator Big Ben Bernanke is keeping an eye on. Tomorrow will be a fun day! Enjoy the weekend.

Stocks Finish Higher Shaking off Poor Manufacturing Data

Stocks closed higher on the NASDAQ for the second straight day despite June’s ISM Manufacturing showing the industry contracted. While there are troubling signs within the data the market was able to push higher. Small cap stocks lead for the day doubling the gains seen on the NASDAQ. Volume was light on the day, but no big surprise with Independence Day on Wednesday. Never fight the trend as today’s market certainly highlights this important lesson. Our Market Direction model shows a buy signal and it is based upon the market action not market opinion. The ISM report shows some very troubling numbers. Numbers would point to the United States economy in or on the verge of recession. One would easily think the market should react poorly and sell off on the news. Initially, the market DID sell off and looked as if we were going to head lower. Buyers showed up and supported the market. It doesn’t matter who they were (“PPT”) all that matters is they should up supporting the market. In the end, it boils down to price action and not what your opinion about the market’s direction. An important step for the market happened today and that was taking out the most recent high. One may think a double top pattern is forming, but the mere fact of making a new high has taken out the downtrend started at the March high. The new high has put in a new higher high. For trend followers this is an important step for the market to continue higher. It is not a guarantee that we will continue to make new highs, but then again no one knows the future. We have rule number one to help us save ourselves if the new higher high for some reason fails. That rule: cut your losses. “Know when to fold ‘em.” If you want to see the numbers behind the ISM figure, I’d suggest heading to here: The trend is our friend. A friendly reminder: there is an early market close on tomorrow prior to the Fourth of July holiday! Enjoy.