Euro Stocks Head Lower, but US Stocks Find Footing Close Near Highs
May 3, 2012 | Comments Off
A lower than expected ADP payroll figure soured the market mood at the early going. Friday’s jobs report is just around the corner and the ADP figure certainly points at a disappointing figure Friday. Volume started out the day running hot, but cooled as the session turned to the afternoon. NASDAQ volume ended lower on the day and is a bit disappointing as higher volume on a day like today would have been super positive. NYSE volume ended higher giving a day of distribution for the S&P 500, but given the support off the lows the distribution day is relatively minor. We are still in a cautious buy mode and continue to look for full confirmation this market can move higher.
Earnings season is in full swing and we continue to see wild swings in stocks posting earnings. MA held up well after posting earnings this morning. We continue to see excellent opportunities with earnings season and tomorrow morning is no exception. Reg FD has certainly produced wild moves after earnings, but we have been able to take advantage of the situation. As long as we cut our losses short we’ll continue to produce solid gains.
Small Caps Reverse Hard Intraday as Stocks Close Well off the Highs of the Session
May 2, 2012 | Comments Off
Positive ISM figures helped the market surge to the session highs only to see sellers take away the day’s gains. ISM Manufacturing grew more than expected and buyers jumped at the chance to move into the market. However, by the afternoon cracks began to become apparent whereby AAPL and small caps began to turn lower. Selling continued throughout the remainder of the trading session with small caps leading the charge lower. PCLN and AAPL helped drag the NASDAQ lower, but the index was able to close in positive territory. Volume was higher on the day and with the mixed action does not instill confidence in this market. Mixed action overall and we continue to operate under a cautious buy signal.
AAPL continues to struggle after its earnings release. The stock is trading quite loose and is in danger of losing its 50 day moving average. There is no doubt that if AAPL turns sour you can almost guarantee the market will move lower in sympathy. Price should dictate on how you trade and this instance there is no need to anticipate the move. Stay patient and let price confirm the move before acting.
Stocks End April Lower for the First time Since November
May 1, 2012 | Comments Off
Weak economic news helped put a stop to the recent bounce off the lows as the market put in its first negative month since November 2011. Volume came in lower on the day despite the market closing lower. Certainly a positive sign, but we’ll need to see the market need to build upon the action ending last week. Mostly a boring market day overall with not much doing and we aren’t about to over analyze it. We’ll need to see this market continue to act proper to stay long.
There are certainly a few good things going well for this market. The NASDAQ finished out the week with solid gains and volume jumping each day. This was a bullish sign institutions were willing to pay up for positions, something you only see in solid uptrends. We’ll need to see this continue to stay with our buy signal on the market.
It is quite amazing the market has been able to keep a float for so long. We have been able to skirt any disaster, but have made things worse for us down the road. At the end of this year there are some $500bn taxes coming due that will significantly impact the economic standing of this country. As a nation the United States has chosen to continue to lay the burden on its younger generation to pay for the mistakes of the prior generation. The amount of debt outstanding will at some point become to0 great of a burden and hold this nation hostage until its liquidated. Pay attention, it will be a historic ride.
Big Wave Trading Portfolio Update And Top Current Holdings
April 29, 2012 | Comments Off
“When you are starting out, it is very important not to get too far behind because it is very difficult to fight back. Most traders have a tendency to take risks that are too large at the beginning” – Gary Bielfeldt
“Professional traders manage their trading to assume that each trade may be a loser.” -Peter Brandt
The Big Wave Trading Portfolio is currently under a BUY signal after having to suffer through three straight SELL signals that were followed by cutting losses and returning to NEUTRAL. The current BUY signal is mainly being produced by the mere fact that the market will not sell off following all of the recent distribution days and is back above its 50 day moving average. Volume on the upside continues to be well below what we would consider a strong BUY signal and it remains a BUY signal basically due to CANSLIM quality stocks. A lot of CANSLIM quality stocks have built or continue to build quality bases. On the day of the BUY signal on Thursday tons of CANSLIM stocks broke out of very constructive base patterns. Despite these very high quality long signals, Big Wave Trading is not investing up to the capacity that it should be due to the recent false signals in our model which in the past has not produced three false signals in a row in such a short amount of time. This is 100% a function of the current market and not our model as 1976-1978 did not even produce this kind of low volume misinformation. Clearly, price is the only thing that matters when stocks are trending up. Volume is irrelevant in a QE environment. At the same time, even if the chart is in perfect order, our portfolios will not tolerate losses and pair back anywhere from 10% to 25% of our positions in stocks if they show losses. Overall, it appears these breakouts are stronger than the breakouts in January as the current consolidation period has given many of these stocks base-on-base patterns or ascending base patterns. The bases these high quality stocks broke out of in January while sound came from the very volatile July-December period in the market thus making some of them suspect. This recent consolidation has tightened many of these charts up. While saying all of this, we are completely aware that the whipsaw market may throw us back into a NEUTRAL signal at any moment. Also, we realize that we are deep into our third year of a QE led uptrend and it remains in our view that we are near the end of this big bull market rather than a start of a brand new bull market. However, we do not trade off of our opinions. We trade off of real price signals based on 130 years of stock market history and 200 years of futures history. We may think we are near a top but if the market wants to move higher and we have signals we are taking them long.
Top Current Holdings – Percent Gain (non-margin) – Date of Signal
Second Day of Solid Gains Pushing Market Model Back to Buy
April 27, 2012 | Comments Off
Another great day of stock market gains despite AAPL taking a back seat consolidating its gains from Wednesday’s market. Volume ended mixed, higher on the NASDAQ for the second straight day showing institutions are scooping up shares on the NASDAQ. The buying spree didn’t begin until the end of the day, but it came on strong and showed there might be some life left to this market. Economic news wasn’t great while jobless claims continue to be weak and is not a great sign for the job market. Just a solid day in the market and it was AAPL getting the ball rolling.
Sentiment took a dive this week as the number of bulls dropped considerably across the board to lows not seen for quite some time. It appears the crowd bought into the bearish talk out of Europe. Bears jumped on the AAII survey to the most since this uptrend began last year. Sentiment is not a perfect indicator, but it does appear sentiment got a bit overzealous to the downside.
There were plenty of breakouts today and some by solid growth companies. Everyone knows AAPL story, but a few other big names had some really nice gains. We love to see this when a market is about to rebound or start a new uptrend. A real positive is the NASDAQ getting big time support above its 50 day moving average. The combination of leaders and support above the 50 day could be setting this market to hit new highs.
AAPL Blows Away Earnings as Stocks end Mixed on Light Volume
April 25, 2012 | Comments Off
Disappointing housing market numbers kicked started the morning economic news, but a better than expected Richmond Fed Manufacturing index was a nice surprise. While the rebound outside of the NASDAQ was nice to see the lack of volume was quite unimpressive. The real story would come out in the after-hours session with AAPL reporting its earnings. Blowing out another quarter of earnings AAPL was able to surprise the street again with fabulous numbers. Closing out the after-hours session, the stock closed off its highs, but above the key $600 psychological level since last week. Today’s session was really lackluster with not much to hang your hat on besides AAPL.
AAPL will take a back seat to Big Ben and the Federal Open Market Committee’s policy statement and rate announcement. The Fed isn’t about to raise interest rates any time soon, but the market would like to hear the Fed go beyond 2014 and state rates will remain low until 2015. May I remind you that is a full 6 years from the bottom. In 1920, the economy suffered a terrible recession (the last great recession before this one) and by 1921 the economy bottomed out and pushed higher. While there was considerable pain the rest of the 20s roared. Is the economy so bad the Fed needs to keep rates this low? ZIRP is not working and neither is pumping in further liquidity. This debate will not matter, only the direction of the market matters and it continues to be down.
AAPL Boosts the Market as the Federal Reserve Announces Rate Policy
April 25, 2012 | Comments Off
The story of the day was none other than AAPL producing fabulous earnings. On the negative side durable goods orders was much lower than expected, but failed to derail the euphoria surrounding AAPL’s earnings. The stock comprises 17% of the NASDAQ 100 and a nearly 9% move helped the NASDAQ finish higher by more than 2%. Volume was higher on the day and above average an encouraging sign. Ben Bernanke and the rest of the Open Market Committee held rates steady (continuing ZIRP), boosted their economic forecast, and said they would remain ready to step in when needed. A positive day for the markets and day one of an attempted rally pushed the Big Wave Trading market model to neutral.
We’ll be looking for a big volume up day of more sometime between days four and seven. Day four will occur next Monday on month end. IBD uses 1.7% on the NASDAQ, but we’d take 1.5% on very strong volume to confirm a new market rally. Any new buys here would be very small for us, we want confirmation of a new rally before stepping into the waters.
Stocks Finish off the Lows but Can’t Shake European Jitters
April 24, 2012 | Comments Off
French elections and a debacle in the Netherlands helped spook investors sending European stock markets lower on Monday. Fears spread across the pond to the US as premarket futures were down close to one percent. There wasn’t any economic news to rattle the markets, nor help them. AAPL was able to close above its 50 day moving average, but that wasn’t before a volatile session. Buyers stepped up and supported the market at the day’s low showing a bit of strength. Volume was lower on the session as institutions weren’t too active in today’s market. We are still searching for day one of an attempted rally and a follow-through day before we get thinking about getting long this market.
Last Thursday’s market was a big tell with a lot of stocks reversing very nice gains. Not to mention the market appeared to head towards confirming a new market rally. Friday’s market was more of the same where the market was unable to sustain any resemblance of a rally. Today it was the first sign of some support, but without big volume it is hard to get behind today’s move. If volume had been huge and the market been able to climb too even we’d be signing a different tune. The market remains in a correction and we have yet to see any signs of stabilization.
The Current Rally Is Coming To An End
April 23, 2012 | Comments Off
I decided to post this as an instablog on Seeking Alpha’s site since they do not accept TA pieces without some fundamental proof.
The Current Rally Is Coming To An End
The Current Rally Is Coming To An End
Big Wave Trading Portfolio Update And Top Current Holdings
April 21, 2012 | Comments Off
“Profits always take care of themselves but losses never do. ” The speculator has to insure himself against considerable losses by taking the first small loss. In so doing, he keeps his account in order so that at some future time, when he has a constructive idea, he will be in a position to go into another deal, taking on the same amount of stock as he had when he was wrong.” –Jesse Livermore
“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
The Big Wave Trading Portfolio is under a SELL signal and is taking action on a day by day basis. Big Wave Trading is currently going short stocks that have had speculative run ups in the recent months that have reversed on very heavy volume. Big Wave Trading is also using inverse ETFs to take a short position in the retirement accounts. Big Wave Trading still sits on a high level of cash and is ready to put it to work as signals generate from what appears to be a coming market sell off. While we reserve no bias as to the market at any time, our models are extremely bearish with internals and externals that make up this model giving us very clear “warning” signals.
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Recent Posts
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- Big Wave Trading Portfolio Update And Top Current Holdings
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