Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading portfolio remains under a SELL signal that was triggered on 10/19/12. It was another down week for the overall stock market and it was another above average weekly volume sell off for the Nasdaq composite. This now brings the total of above average volume weeks on the downside this year to 6 vs. 0 up weeks on above average volume. Despite the constant distribution that we have seen the past four years, it simply has not mattered as we are in a QEn environment. This means that despite the weak action in the overall market, and stocks following earnings lately, it would be unwise to assume that the next rally attempt, if it does come on lower volume, will fail. We have seen time and time again how higher volume sell offs are supported around the 200 day moving averages on lower volume and then the next thing you know we are hitting new highs on below average volume. Therefore, despite being under a SELL signal with short positions in the DJIA and SP500, we have an overall neutral/cash bias at Big Wave Trading across the board. We are prepared for the market to find support here and rally and we are ready for the magic bullet of QE to finally run out of firepower. Either way, we are ready. The most telling issue in this downtrend is two fold, for us. One, we still have long positions that were initiated in the previous uptrend that continue to trend higher above key short-term and long-term moving averages. If more of our longs were outright breaking down on huge volume, we would be more “worried” about falling prices. Second, we continue to receive zero extremely high reward/low risk ratio short signals. Without these “screaming” shorts, we find it best to stay neutral on the overall downtrend taking only the 50 DMA trend following signals in the market indexes. Since June we have not had a single stock produce what we would call a 10 out of 10 long or short signal. The new signals that generate, since June, have at best been a 7 or an 8 out of 10. This is not terribly surprising considering the magnitude of this artificial low volume stock market rally the past four years. However, it is annoying as it prevents us from making any substantial money to the upside. Until we receive these “near-perfect” signals, we will continue to operate on a shoestring basis giving preference to trend following signals in high priced stocks, extremely high quality CANSLIM stocks, and index ETFs that trade significant volume. If the market finds support around the 200 day moving averages of the major indexes and we can rally back above the 50 day moving average, obviously the SELL signal will be negated and we will be back looking to operate on the long side. However, until we start to rally on higher volume, sell off on lower volume and then rally on higher volume, on the market indexes, there is no way we will even think about increasing our size. That is unless that 10 out of 10 shows up but it is hard to believe they will when the overall market’s volume is artificial. Low volume rallies followed by heavy volume sell offs that are then followed by more low volume rallies do not produce the quality chart patterns that we require (along with growth in the fundamentals) before going heavily long in any one position. For now, we remain under a SELL signal and will operate accordingly. Cash is king, right now, for those with a time horizon longer than one day. Aloha and have a wonderful weekend everyone! Top Current Holdings – Percent Return – Date of Signal AVD long – 143% – 1/10/12 NTE long – 59% – 8/17/12 CAMP long – 56% – 4/26/12 VRNM short – 46% – 4/10/12 MAGS short – 30% – 4/18/12 HEB short – 29% – 9/24/12 CSU long – 29% – 9/4/12 SHF long – 28% – 8/1/12 TAYC long – 26% – 6/15/12 ASTM short – 26% – 7/17/12

Big Wave Trading Portfolio Update And Top Current Holdings

THE COLUMN BELOW WAS A PREMIUM MEMBERSHIP COLUMN PUBLISHED ON FRIDAY FOR BIG WAVE TRADING MEMBERS. ANALYSIS SPECIFIC TO TRADING POSITIONS HAS BEEN REMOVED. Happy anniversary of the October 19, 1987 crash everyone!! Well, well, well. It sure was an interesting day to say the least. Today’s option expiration was nothing short of exciting as stocks sold off on heavy above-average higher-than-the-day-before volume. Stocks and stock indexes didn’t just sell off, they cratered. The weakness in the Nasdaq and Russell 2000 finally spread over today into the SP 500 and DJIA thrusting all four major indexes into a SELL signal on our market trending model. The Nasdaq and Russell 2000 were currently under a NEUTRAL signal and the SP 500 and DJIA were under a BUY signal but today’s sell off was confirmed everyone thus switching everything into a SELL. It doesn’t matter where you look. The indexes, futures, the options chain, ETFs, or inverse ETFs. Wherever you look, volume exploded higher. What didn’t explode higher but finally moved was VIX. VIX has finally begun moving in the direction those of us at Big Wave Trading believed it should have started moving in on 9/25. While the move came on convincing volume, and the CBOE reported the highest weekly trading volume ever in VIX futures, a BUY signal was not triggered in VXX/UVXY/TVIX. [MEMBERS CONTENT ONLY]. [MEMBERS CONTENT ONLY]. Getting back to the overall market, it was the fifth time this year that the Nasdaq has closed lower for the week on above average 50-week volume. As just mentioned, this now makes it five times that this has happened versus 0 times the Nasdaq has closed higher on above average 50-week volume. 5 – 0. For the year, the NYSE is actually up 1 vs. 0 times down. But the NYSE is not where you find your dynamic exciting technology based growth stocks. Those are found on the Nasdaq and Russell 2000. When you consider the volume pattern of the Nasdaq and then take a look at the recent slope of the Relative Strength line of the Nasdaq and Russell 2000 compared to the SP 500 you can see that we have a potential problem brewing here. The Relative Strength line of the Nasdaq is simply imploding here nearing the December 2011 levels. Meanwhile, price is nowhere near those lows. If this trend continues, watch out! The Nasdaq and Russell 2000, in healthy uptrends, lead the market. The Nasdaq and Russell 2000 start to lag the NYSE when a rally is on its last legs. The Nasdaq and Russell 2000 lead the market down when a downtrend is starting in the stock market. What stage are we in now? You are correct. This obviously means that now is the time to be cautious. This is especially the case when you look at the recent action in AAPL, GOOG, AMZN, PCLN, and LULU. After taking a look at those, take a look at the big giant bellweathers like IBM, INTC, MSFT, SBUX, MCD, and GE. Notice the same bearish action? Then take a look at your leading biotech stocks like ALXN, BIIB, VRTX, and PCYC. Is there anything surviving? Of course. The bank stocks like GS, BAC, and JPM are acting like there is nothing wrong and of course for the master criminals that run these banks and the USA there is not. On top of that, they need to make sure real estate prices go up so that all their real estate holdings continue to make them wealthier and wealthier (If these sociopaths CREATED their own businesses this would not be a problem. They didn’t.) on the backs of the middle class. On that note the XHB is fine. HOV, TOL, PHM, BZH, MTH, MHO, LEN, KBH, etc. all look like they were completely oblivious to the carnage gripping the market today. If you see the big banks (KBE) and home builders (XHB) start to roll over, then you can be sure this uptrend is finished. To me, it already is, as I follow the Nasdaq/Russell 2000 as market leaders. However, if these stocks continue to rally, show no damage, and we begin to find a floor to this selling, I would expect that the uptrend could definitely continue. I mean, it is a Fed based QE driven stock market. When stocks sell off, they step up to make sure their jobs are safe for now. I am sure one day this will stop working. Until then, the theme don’t fight the fed still rings loud and true. No one can predict the future in the stock market. I will not try to either. While it looks like we are about to crack wide open, we could easily find support and rally higher on no volume. Hell, we did it in 2009, we did it in 2010, we did it in 2011, and we did it earlier this year in 2012. Why not a fifth time? [MEMBERS CONTENT ONLY]. [MEMBERS CONTENT ONLY]. It looks ugly but it has looked ugly before. Let’s see what happens next week. Have a great weekend everyone. Aloha. [MEMBERS CONTENT ONLY]. Top Current Holdings – Percent Gain – Date of Signal AVD long – 139% – 1/10/12 NTE long – 62% – 8/17/12 CAMP long – 59% – 4/26/12 CLGX long – 52% – 6/19/12 SVNT long – 44% – 9/10/12 VRNM short – 39% – 4/10/12 CSU long – 32% – 9/4/12 MAGS short – 31% – 4/18/12 SHF long – 28% – 8/1/12 ASTM short – 26% – 7/17/12 HEB short – 25% – 9/24/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio is currently under a NEUTRAL condition. The model switched from BUY to NEUTRAL on Tuesday due to the Nasdaq closing below the 50 day moving average on average volume. Our model expected this switch to occur after Apple (AAPL) closed below the 50 day moving average on strong volume on Friday October 5th. On September 24th Apple began to sell off on above average volume and continued to do so for another four sessions before finally breaking down on October 5th. Another problem we started to also notice was the overall lagging of the Nasdaq’s Relative Strength line compared to the SP-500′s Relative Strength line. While the Nasdaq was breaking out to new highs in September, its RS line was severely lagging no where near its previous March highs. In recent weeks we have seen the Nasdaq’s RS line simply implode compared to the overall market. This RS lag is even more severe in the Russell 2000 full of vibrant young growth stocks. This RS lag is overall problematic for a variety of reasons. You normally want to see new exciting growth companies and revolutionary technology companies lead a market. Not stodgy old safe dividend producing large capitalization stocks. While a trend is a trend, the strength of a trend is directly correlated to what type of stocks are leading a market. Another problem we have witnessed during this switch to NEUTRAL is that we have not seen a rotation from the leading growth stocks that have come under some intense recent selling into new leading growth stocks. On top of that, we noticed that WFC and JPM are putting in low-volume breakout high-volume fakeout reversal moves. GS and BAC appear to want to do this too. As the rulers of the world go, so will go the stock market. If the Lords of Finance sell off, the market is going to sell off. So we have a market under heavy distribution, leading stocks like AAPL and PCLN possibly rolling over, banks (KBE KRE) putting in breakout fakeout moves, and an extremely low VIX on top of all of this. What does all this point to? A high probability that we will enter into a SELL signal at some point and will begin to rework the short side/long put side of the market. However! However. There is always the Fed and Ben Bernanke. They have already intervened during every single one of the last market pullbacks. What is to say this will not be any different? They have already screwed the poor and middle class over with their “zero-percent-CDs-forever-policy,” allowing the folks that do not have time to invest in the markets no chance what-so-ever to get ahead. They have already bailed out failing corporations effectively killing free markets. They have continued to print worthless dollar bills at the push of a button for years now, effectively destroying its purchasing power thus causing massive inflation that hurts the folks that can’t save money in the first place due to the low interest rates. So do we think that an actual prolonged downtrend will start thus allowing a new fresh crisp batch of leaders to rise from the ashes when the market is ready to move higher again? Nope. We sure don’t. We can only hope that one day the Fed decides to let the market do what the market needs to do but we are not going to hold our breaths. The first area of support we are looking at is the 200 day moving averages on all leading market indexes. The bottom line, for right now, and I mean right now, is that we are NEUTRAL. We will take long and short signals as they arise. We are extremely picky here and if it is not perfect or near perfect for the reason we want to conduct the trade, we will not take the trade. On a final note, speaking of perfect, we did not have one technical/fundamental or even technical alone “perfect” chart setup during the entire uptrend from June to September. This was the first time since the 2009 uptrend which only produced CANSLIM quality long signals and zero “perfect” CANSLIM/”perfect” chart signals. To me that tells me all I need to know about the quality of the uptrend itself. Aloha everyone and have a wonderful and profitable week. Top Current Holdings – Percent Return- Date of Signal AVD long – 136% – 1/10/12 CAMP long – 61% – 4/26/12 NTE long – 57% – 8/17/12 SVNT long – 53% – 9/10/12 CLGX long – 53% – 6/19/12 VRNM short – 39% – 4/10/12 PRXI short – 37% – 3/30/12 SHF long – 35% – 8/1/12 MAGS short – 31% – 4/18/12 CSU long – 30% – 9/4/12 ASTM short – 25% – 7/17/12

Big Wave Trading Portfolio Update And Top Current Holdings

There will not be a weekend update this week. We apologize for the inconvenience. Top Current Holdings – Percent Return – Date of Signal AVD long – 145% – 1/10/12 CAMP long – 72% – 4/26/12 SVNT long – 61% – 9/10/12 NTE long – 60% – 8/17/12 CLGX long – 58% – 6/19/12 VRNM short – 36% – 4/10/12 PRXI short – 36% – 3/30/12 SHF long – 35% – 8/1/12 CSU long – 30% – 9/4/12 MAGS short – 28% – 4/18/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a BUY signal from August 3rd, following the past week’s market pullback. The pullback was overall orderly with only Tuesday being a session of concern. The fact that there were many stocks that made big moves following that session and that the market did not follow through immediately with the selling shows that the uptrend remains intact and in solid shape. Despite the low VIX and high % of bulls to bears in the Investors Intelligence survey, the atmosphere remains overall toxic. Individual investors based on the AAII survey and the real-time Finviz survey continue to point to a public that is overall skeptic to bearish. The crowd is definitely not overall bullish. At best, it can be said that sentiment data points remain mixed. What doesn’t remain mixed is price. Price is still trending higher on all time frames except the most short-term. If we get another distribution day or two, we might have some more short-term problems. However, the action in individual stocks in regards to long-term base structures, along with stocks already hitting new highs, indicates that the market might want to trend higher for a bit. I just would not expect any kind of explosive gains. Especially when the macro picture is at best not bad. 1% to 2% GDP growth is never going to light the fire underneath a country’s stock market. For now, we will stick with this slow uptrend that is still not offering any what we would classify as “perfect” or even “near perfect” long signals. Trend following big priced stocks that trade a ton of volume by buying in the money options with low implied volatility as they cross above and below whatever moving average one uses continues to be a superior methodology compared to the once extremely profitable tried and true combination CANSLIM/momentum methodology. Aloha everyone and I hope everyone is having a wonderful weekend! Top Current Holdings – Percent Return – Date of Signal AVD long – 141% – 1/10/12 SVNT long – 70% – 9/10/12 NTE long – 61% – 8/17/12 CLGX long – 52% – 6/19/12 CAMP long – 46% – 4/26/12 VRNM short – 35% – 4/10/12 SHF long – 34% – 8/1/12 PRXI short – 33% – 3/30/12 MAGS short – 28% – 4/18/12 STX long – 25% – 6/29/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio continues to be under a BUY signal that was generated on August 3rd. The past week was another overall solid week with solid intraday price action outside of Friday. Another positive was the Nasdaq having two up sessions on volume well above average, continuing the trend from the previous week. We continue to believe that this uptrend can last longer based on the overall public (AAII Survey bulls: 37.5%) still not showing that bullish fever and the NYSE short interest ratio sitting around 5-year highs at 21.03. As long as the trend is up, the public is not overly bullish, and the short interest ratio remains high, the trend should continue to be our friend. We know what to look for if that changes but so far we have absolutely no signs of a change in trend coming. In fact the last distribution day on the Nasdaq was on August 21st (according to Telechart’s data). That is one month without a distribution day. Clearly, for now, there is nothing to worry about. We will cross that bridge when we get there. As for stocks, we continue to find a ton of attractive long positions and continue to see many others setting up. If this continues, it bodes well for the continuation of the rally. Despite some trading sessions the past week being quite boring, there were plenty of stocks that made exciting dynamic price moves higher. Seeing these stocks move like they are on quiet days is a clear sign of real accumulation. The only bad news, so far, in this rally is that we have not had a single stock set up in a “perfect” setup. However, that isn’t surprising as beautiful green filled chart patterns have been in decline since the 2008 crash. Trend following is definitely where it is at. Playing hot charts is not. I am sure one day that will change but as of right now it has not. We’ll keep hunting. Have a lovely rest of your weekend and aloha. Top Current Holdings – Percent Return – Date of Signal AVD long – 141% – 1/10/12 SVNT long – 70% – 9/10/12 NTE long – 65% – 8/17/12 CLGX long – 58% – 6/19/12 SHF long – 36% – 8/1/12 CAMP long – 33% – 4/26/12 PRXI short – 32% – 3/30/12 MAGS short – 30% – 4/18/12 VRNM short – 30% – 4/10/12 STX long – 25% – 6/29/12