Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading portfolio remains under a NEUTRAL signal, despite the strong gains this past week in the stock market. The gains from last week were very strong but it came from a very oversold condition and was straight up in a V-shaped formation backed by zero accumulation. While we are used to the stock market rallying on zero volume following heavy volume selloffs, we are at the same time still not used to it. Its a learning process adapting to the current market we have been in the past two years, following 200 years of normal price and volume relationships in equity and futures markets. Therefore, despite the strong gains, we remain in a NEUTRAL condition. This being said we do see constructive action underneath in the stock market. We had a lot of stocks fly past logical buy points that we were watching the past week. These stocks, instead of pulling back and allowing for a “safe” entry, continued to rally higher. Some examples include PRLB, FB, GMCR, and HIMX. We also see other stocks working on possible basing formations in big heavy volume leaders such as GOOG, PCLN, AAPL, and AMZN. We also see some new leadership in the form of 3D-printing stocks like SSYS and DDD. So while we remain under a NEUTRAL condition we will be more than willing to switch to a BUY mode. We would like to see the market base sideways or move lower on lower volume and then begin a strong move higher before this signal is generated. If we do not see the market pullback and instead are up 2% on lower volume Monday we will be obey the model and switch to BUY. However, we would make any position small as we are overbought short-term and simply have no volume. Historically, December is a bullish month for the stock market and it does rise on little volume most of the time. Therefore, volume is not much of a concern right now as the overall overbought condition following the V-shaped rally in the indexes. The bottom line is that while we see some constructive action in the market and it is seasonally a time to be bullish it still is not good enough to press bets here. We will continue to operate on the smallest level we have ever operated on at Big Wave Trading, continuing to keep an extremely high level of cash until better chart patterns can build in the stock market. 2012 has been the worst year ever going back to 1996 in terms of win/loss pain/gain ratios. Thankfully, due to trading small and getting smaller and smaller and smaller as the year went on we avoided the losses that the trend following wizards were dealt in the month of October and surely have been dealt in the month of November. In that regard, the past two months have been “wins.” Overall, though, losing money is never a winning situation. Still a 10% drawdown sure as hell beats a 50% drawdown. When you are wrong, get smaller. When you continue to be wrong, get even smaller. If you are still wrong, get as small as you can or do not trade at all. This has been the ultimate lesson from this trendless yet extremely choppy/volatile low-trading range market the past two years. The other lesson learned is to never overly trust one particular system. Diversifying amongst a bunch of different backtested systems that perform differently in each market and knowing how to weigh each system in each market environment has been another lesson well learned. Aloha and I wish you all the best during the upcoming week! Top Current Holdings – Percent Gain – Date of Signal AVD long – 130% – 1/10/12 NTE long – 124% – 8/17/12 VRNM short – 56% – 4/10/12 CAMP long – 54% – 4/26/12 CSU long – 43% – 9/4/12 ASTM short – 34% – 7/17/12 MAGS short – 30% – 4/18/12

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a SELL signal on the SP500, Nasdaq, Russell 2000, and DJIA. The NYSE switched to BUY signal yesterday and subsequently re-switched to a NEUTRAL signal by the close of today’s trading. Two words can sum up this week of trading: random, ugly. Another word many traders were using this week was confusing. While we remained under the 50 day moving average on all important (I would not consider the NYSE “important” per se) indexes, the action on Thursday had the type of move that signals a short-term low has been hit. The previous three to five sessions in the big indexes prior to Thursday indicated a market that wanted to continue to bounce. However, today completely put a wrench in that assumption. The worst part of this whipsaw move the past two days is that our short ETF positions gave a partial cover signal and our exposure was reduced at the open on the gap only to see the market sell off all day confirming the original signal. It is what it is. Now what? Well, technically, nobody knows. Still, with this kind of action in the indexes, following the already in motion sell off, it can be said that based on history the market should continue to sell off. However, based on the history of the past four years, the market should establish a low around here on very little volume and then rally to new highs on even lower volume. That has been the pathetic, but real, pattern the past four years. It’s outside of anything you can backtest on USA markets but it is what we have. Our current methodology has us in a very heavy cash position, with some current long positions still working, and a couple of hedged ETF shorts to counterbalance the longs. As these longs give final profit taking or cut loss exit signals, we will increasingly become more weighed to the short side via our ETF short positions. If we do find support here, our longs should continue to work and we will exit the ETF short positions. As for current trading opportunities we are finding very few. There are a couple of recent pumps that are in shortable positions but you can’t place large amounts of capital in these cheap pumps. There are very little to zero stocks setting up in current strong technical patterns, with proper volume characteristics, that lead to high percentage breakouts. On top of that, there continues to be no trend following signals via our trend following methodology in individual stocks. We have noticed strength in a few world stock markets, particularly singling out the South East area. It will be interesting to see if the money continues to flow into these advancing nations and out of declining nations like the United States. Follow the money. The money never lies. Price is the only truth, in a world full of professional and well-payed liars. We wish everyone a great weekend. Maybe next week we can get a more trend-friendly market. The current chop of the small trends that we do get make it nearly impossible to make any significant gains as we must position size accordingly. Aloha everyone! Top Current Holdings – Percent Return – Date of Signal AVD long – 120% – 1/10/12 NTE long – 59% – 8/17/12 VRNM short – 51% – 4/10/12 CAMP long – 48% – 4/26/12 MAGS short – 29% – 4/18/12 CSU long – 28% – 9/4/12 ASTM short – 25% – 7/17/12

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

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 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

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

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

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

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

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

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

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

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

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

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

Big Wave Trading Portfolio Update And Top Current Holdings

It was an exciting end to what was a boring week. The weak SELL signal that our portfolio was under switched to a NEUTRAL signal on Friday morning with the Nasdaq gapping above the 50 day moving average. This automatically put us at NEUTRAL as the 50 day moving average was the fail safe area. In the final 30 minutes of trading the stock market indexes began to take off again on strong volume. This then switched our model into a BUY signal. This signal is not being confirmed by volume in the Nasdaq, Russell 2000, leveraged and non-leveraged ETFs. This means that we will continue to trade small but we can increase our long positions in our portfolios due to recent longs all working out the past few days. Since the BUY signal was triggered at the EOM, we can not say that this is a true strong signal. There simply are too many non-confirmations. The model will need to see further confirmation via price and volume in the indexes and ETFs if it is to get anywhere near 50-100% invested. The best aspect of the BUY signal comes from leading stocks with strong fundamentals and technicals. Even though these breakouts/moves are not even close to being perfect, we must recognize in this strange QE/Operation Twist environment volume has become irrelevant for the first time in history. There is no other point in time going back to 1880 on the DJIA, 1957 on the SP 500, and 1971 on the Nasdaq where you will see the market rally for any period of time on below average monthly volume. If you pullup a monthly chart plotted with a 50 monthly volume average you can see that there has never been a time where the averages have rallied on below average volume. The shocking thing about this is that this has been going on since the end of 2008 on the SP 500 and since the end of QE1 in 2010 on the Nasdaq. So this is unprecedented trading and the lack of volume will continue to keep us off of margin until the 50 day weekly and monthly volume average sees some kind of decent accumulation. Market manipulated money printing rallies are simply not going to produce the old 100%-500% gains in 6-12 months like we got used to in leading momentum stocks from 1982-2008. Only a major market reset where prices can find a real bottom is going to unleash another round of accumulation buying. The current BUY signal will switch to NEUTRAL if the market closes below Friday’s LOD. There are some nice bases out there that are still forming in strong CANSLIM quality names. If these continue to breakout, we will continue to increase our long exposure per each position. In this tape, no trend is safe, so we must move very carefully. Going all in 200% margin right here is simply foolish as volume does not confirm this is going to be a powerful move across the board. If that volume comes in during the next couple of weeks, wonderful. If it doesn’t, will you really be surprised? I know I will not. Have a wonderful weekend and aloooooha! Top Current Holdings – Percent Gain – Date of Signal AVD – 84% – 1/10/12 BVSN short – 74% – 3/19/12 VRNM short – 38% – 4/10/12 PHMD short – 33% – 5/11/12 MAGS short – 28% – 4/18/12 WZE short – 27% – 4/10/12 ANGI – 26% – 5/31/12 SNTA – 25% – 6/26/12

Big Wave Trading Portfolio Update And Top Current Holdings

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

Big Wave Trading Portfolio Update And Top Current Holdings

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

Big Wave Trading Portfolio Update And Top Current Holdings

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