Current Top Holdings And Returns In The Big Wave Trading Portfolio
September 29, 2011 | Comments Off
Currently the Big Wave Trading portfolio is long 3 inverse ETFs, long small positions in 4 stocks, and short 20 individual stocks with one being heavily weighted in one leading stock of the past rally that is topping out currently. The inverse ETFs are used in my retirement account to profit from bear markets (currently 100% invested) and are used to put any cash on the sidelines in the regular portfolio to work if new short setups do not appear. Big Wave Trading always cuts losses as fast as it can when we are wrong. Big Wave Trading never holds on to a losing stock. We sell it or cover it immediately, no questions asked. Subscriber audited results for 2010 and 2011 can be found on our website.
Top Current Holdings (all shorts) – Total Returns – Date Of Signal
Institutional Selling Accelerates in the Final Hour as Stocks Close Lower
September 29, 2011 | Comments Off
Hope of a European Bailout deal still fresh on Bulls’ mind gave a boost to stocks at the onset of trading. Early morning trading witnessed to stocks moving to the upside, but volume simply was not accompanying the move. At mid-day it appeared the market was going to be able to hold onto its gains, but institutions once again stepped up and sold stock. During the final hour volume exploded as sellers dumped stock on the market, not a sign of strength. We continue to believe this market is very sick and today’s move once again has confirmed our view of the market.
At the most previous low last Thursday a few traders have remarketed the internals did not confirm the move lower by the market. While this may be a fact the most important factors in the market is market leadership and the price/volume action of the market. You can create all the oscillators and signals you want from price and volume, but nothing is more important than those two elements. Keep it simple because the quality of decision making will only erode as complexity grows. Complexity will also bread doubt as multiple indicators flashing mixed signals can and will only confuse you. Keep it simple and stay with Big Wave Trading.
Tomorrow brings on economic data including jobless claims and GDP readings. Briefing forecast for the third estimate of GDP is 1.2%. A prior reading of 1.0% last month did not help stocks. ISM figures including the Manufacturing and Service sectors have been below forecasts. Slumping ISM readings does not inspire confidence we’ll see much of a jump above 1.2% for GDP. We’ll certainly see the market react to the figure released tomorrow. Given the current market environment it does not look promising for the bulls tomorrow.
Low Volume Rally Fades into the Close as Institutions Rush to Sell Stock
September 28, 2011 | Comments Off
The European Bailout plan hope carried through to the open as European Stocks jumped at the thought of a bailout. Housing prices dropped again, but again less than expected helping out stocks move higher. Consumer confidence dropped once again, but like Case-Shiller home price index it wasn’t as bad as expected. It is incredibly disappointing we consider numbers positive if they aren’t as bad as expected. Intra-day it appeared the market as going to break away from the recent consolidation, but institutions had other plans. The final hour of trading institutions sold stock and in a big way as volume jumped in the final hour of trading. We continue to see very shaky action from this market and it continues to highlight cash is king.
We continue to hammer on the point we have a severe void in market leadership. Our market leadership group only was able to sneak out a .53% gain. It is ultra-important for a market to have solid leadership breaking out in sound bases for a market has any chance of pushing higher. Last September, we had solid leadership and a market cooperating with a tighter price action. Until we see the landscape of leadership change and the market tighten up we’ll be stuck in this trading range.
New Seeking Alpha Article
September 28, 2011 | Comments Off
2 Small-Cap Winners In A Market Full Of Losers
Stocks Vault Higher Lead by the Dow Jones Industrial Average
September 27, 2011 | Comments Off
A European new bailout package, with the purpose of re-capitalizing banks sent the US stock market higher at the end of the day. Unfortunatley, volume on the NYSE was drastically lower. Over on the NASDAQ volume did creep higher, but barely and it was WELL below the 50 day volume average. Economic data once again came in disappointing. It has been awhile since we have seen some decidely positive move from an economic reading. Most could be described as “well, it could have been worse.” Today’s move came on less than stellar volume and with the late day move screams of a computer gone rogue. The market remains loosey goosey and until it can tighten up we can expect further volatility.
Many dip buyers are screaming and pounding the table to buy stocks right now. They are “cheap” because of a market decline. Many have not studied market tops and bottoms. Mainly, they subscribe to the theory of buying low and selling high. Unfortunately, dip buying only works during a bull market and not at a top in the market. Bull markets condition dip buyers until the end of a bull when they wipe out majority of their gains. We aren’t in the dip buying camp and can spot a big turn in the market.
Commodities Point to a Troubled Economy
September 26, 2011 | Comments Off
Over the past few months we have seen the stock market on the verge of a bear market, a Greek default, and a historic September collpase by the Boston Red Sox. One ominious sign has been the price action going on with commodities. Commodities are the foundation of an economy and it is always a good practice to take a peak at their price action to get a sense for the economy.
Our economy is more than just the United States, it is global. The global economy is complex and trying to figure out every correlation is quite daunting. One way, an eaiser way is to check out commodities. Here is the current CRB index.
New Seeking Alpha Article
September 22, 2011 | Comments Off
3 IPOs That Will Rise From The Market’s Ashes
Ben Bernanke Fails to Excite the Market as Intense Selling Drops another Day of Distribution
September 22, 2011 | Comments Off
Over the past few trading sessions financial and small cap stocks have been noticeably weak. Heading into the Federal Reserve Announcement MCO came out downgrading a few banks including BAC sending the stocks lower. Volume ran consistently higher throughout the day on the NYSE while the NASDAQ flirted with the volume being unchanged. The situation changed shortly after the Fed Statement was released and only accelerated in the final hour. Institutions continue to dump stock on the market despite what the experts say about the fundamentals of this economy. Today marks the second straight day of distribution as the market is signaling danger ahead.
Last night’s commentary I wrote about the little head and shoulders pattern developing on the Russell 2000 (used IWM). Today the index plunged through not only the head and shoulders pattern, but the infamous bear flag many have been referring to. For kicks I calculated the bear flag target and its quite scary the Russell 2000 projection for the bear flag is roughly 33% lower from here; the target, 420. Anything is possible, but one thing is for certain this market wants to head lower from here and if you are long stocks it is time to unload and protect yourself.
Late Day Selling Spoils Rally Signals a Day of Distribution
September 21, 2011 | Comments Off
A big black eye of this current uptrend was today’s reversal and closing just off the lows of the session. All was well heading into the afternoon hours as plenty of leading stocks were showing excellent strength. Just as the morning got going news out of China of the government cracking down on e-commerce companies sent the related stocks in a downfall. Stocks like AMZN, BIDU, and SINA and so on were hit hard. BIDU and AMZN have been stalwarts since the March 2009 market bottom and today showed some serious cracks. Late stage breakouts have been common in this uptrend and today may have been the straw that breaks the proverbial back of the stock market.
Small caps continue to be very weak here and failed to keep up with the rest of the market during this uptrend. Even during today’s rally small caps lagged the broader market. In new uptrends small cap stocks are always leaders to the upside and when they lag it is a big red flag. Of course we could see the market reverse course and push higher, but given the action today and 3 days of distribution on the NASDAQ and S&P 500 it is becoming unlikely. On a daily chart IWM has formed a little head and shoulders pattern, pay attention to the pattern. In addition to the head and shoulders pattern check out its relative strength line. IWM is lagging significantly a sign of trouble especially when the RS line hits a new low prior to price hitting a new low.
Despite Euro Troubles, AAPL Shines as Stocks Bounce off Market Lows
September 20, 2011 | Comments Off
More troubling news from the housing market was overrun by continued fears in the European nations. Greece is the cornerstone of the controversy. They need cash badly and their budget efforts continue to fail expectations. European stocks continue to be weak sending US stocks lower at the open. Sellers fear a Greek collapse would render the assets on the books of European banks worthless. The market continues to adjust to the situation and in the United States financial stocks continue to be weak. The market was able to garner support at the end of the day sending the NASDAQ into positive territory. Although the NASDAQ failed to close positive the intraday reversal is a bullish note. We have positives, but it will take a bit more time as AAPL stock being a big positive.
AAPL stock broke out of its recent price consolidation. Volume was just about 32% higher than its 50 day volume moving average. Not as much as we’d like to see, but it is something to take not of. AAPL stock appears to be the market’s savior as it helped thrust the NASDAQ higher after opening lower on the day. AAPL is in a later stage base tends to be prone to failure and with volume not being gigantic it sends a signal AAPL stock has a higher probability of failure. Will AAPL stock fail this breakout? It is anyone’s guess, but the price action and volume (lack of big, big volume) says it will at least go higher over the next few days. Ideally, volume would have been 40-50% higher.
