Aloha

Market Speculator

At Big Wave Trading, we feel this market is not our new bull market. With that said, we are finding some stocks that are setting up nicely and starting to present opportunities to make money. In the grand scheme of things we aren’t in an environment where we are going to grab our 1000%+ winners. Therefore, we are keeping our cash levels high and, new trades small, taking profits quickly, and (THE MOST IMPORTANT THING) cutting our losses (keeping them small).

We continue to see market pundits believe we have bottomed in financials. However, this was stated back in September ‘07, Jan. ‘08, March ‘08, and again now. When will we bottom? Here at Big Wave Trading we only care when we know our new bull market is here. At the moment the VIX, VXN, NH to NL ratio, and lack of a follow through day tell us we are not there yet. The real big tell is that we are not seeing as many stocks come through our market scan as we would normally see in a bull market. Stocks simply aren’t ready to make a giant leap forward. Until they do, we’ll be cash heavy read to pounce on the new opportunities.

Looking forward to seeing Josh back on the saddle!

Aloha,
Market Speculator

The worse trait to have as a trader/investor is the gambler mentality.  All the greatest speculators in the world knew how to cut their losses and avoid trendless/bear markets.  Our current bear market is one that should be avoided all together.  IBD research has shown that Monster Stock gains arrive when we are at the beginning of a new bull market.  Why not use this research to our advantage and get a large cash position.  We can still find some stocks that are setting up nicely in a bear market but our odds are not as great as if it were a bull.  The key is to take profits a bit more quickly in bear markets and make sure you keep your losses small!  Not only will you see gains in your trading but you’ll be well capitalized for the next Bull Market!

Aloha,
Market Speculator

[2007.12.13 09:12:29] MauiTrader: OMG you know why you cut your losses?
[2007.12.13 09:12:33] MauiTrader: ASYS!!!!!!!!!!!!!!!!!!!!!!!!!!!!
[2007.12.13 09:12:36] MauiTrader: the mistake i made
[2007.12.13 09:12:40] MauiTrader: had i NOT fixed it immediately
[2007.12.13 09:12:44] MauiTrader: would have cost me everything
[2007.12.13 09:12:51] MauiTrader: i would be on 4 to 1 margin broke!!!!
[2007.12.13 09:13:01] MauiTrader: or even 21 to 1 would have been badly hurt
[2007.12.13 09:13:06] MauiTrader: wow
[2007.12.13 09:13:08] MauiTrader: amazing
[2007.12.13 09:13:18] MauiTrader: i ams till long ASYS from
[2007.12.13 09:13:41] MauiTrader: August
[2007.12.13 09:13:45] MauiTrader: i think or July
[2007.12.13 09:13:46] MauiTrader: not sure
[2007.12.13 09:14:01] Mahket: so much for this little rally lasting
[2007.12.13 09:14:04] Mahket: poof
[2007.12.13 09:14:06] MauiTrader: August
[2007.12.13 09:14:11] MauiTrader: i went long in August
[2007.12.13 09:14:19] MauiTrader: the next day i sold 75% due to gap down
[2007.12.13 09:14:27] MauiTrader: but held 25% due to it holding 50 dma
[2007.12.13 09:14:35] MauiTrader: i bought more in early Dec
[2007.12.13 09:14:42] MauiTrader: then again when i made my mistake
[2007.12.13 09:14:48] MauiTrader: then i sold all of the last buy
[2007.12.13 09:15:01] MauiTrader: and over half of the early Dec buy on that nasty 12/11 day
[2007.12.13 09:15:04] MauiTrader: but had I not
[2007.12.13 09:15:16] MauiTrader: and i seen it on 12/12 and noticed it held 50 dma
[2007.12.13 09:15:19] MauiTrader: and would have hoped
[2007.12.13 09:15:26] MauiTrader: since it held and bop went green again
[2007.12.13 09:15:30] MauiTrader: maybe i dont sell any
[2007.12.13 09:15:32] MauiTrader: then today
[2007.12.13 09:15:41] MauiTrader: i would have had one of the worst days of my life
[2007.12.13 09:15:45] MauiTrader: had i stuck with my mistake
[2007.12.13 09:15:49] MauiTrader: instead i fixed it
[2007.12.13 09:15:51] MauiTrader: and walla
[2007.12.13 09:15:54] MauiTrader: i saved my ass
[2007.12.13 09:15:59] MauiTrader: THIS IS WHY YOU CUT LOSSES ALL THE TIME
[2007.12.13 09:16:04] Troy: I tried to print a posting in the forum and some of the word on the printed version run off the page. Is there a way to get a printer friendly version of the postings?
[2007.12.13 09:16:07] MauiTrader: ESPECIALLY IN ACCIDENTLE BIG POSITIONS
[2007.12.13 09:16:20] MauiTrader: ask nictech in a PM
[2007.12.13 09:16:26] MauiTrader: send nictech a message
[2007.12.13 09:16:29] MauiTrader: he is the tech guy
[2007.12.13 09:16:36] MauiTrader: doesn’t anyone find that amazing
[2007.12.13 09:16:44] MauiTrader: you guys should be learning something major here
[2007.12.13 09:16:46] MauiTrader: BY CUTTING LOSSES
[2007.12.13 09:16:52] MauiTrader: AND FIXING A HUGE ERROR
[2007.12.13 09:16:52] MauiTrader: IMMEDIATELY
[2007.12.13 09:17:01] MauiTrader: AND NOT STICKING WITH THE WRONG MOVE AND INCORRECT GAME PLAN
[2007.12.13 09:17:05] MauiTrader: I JUST SAVED MY ASS
[2007.12.13 09:17:11] MauiTrader: !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
[2007.12.13 09:18:15] Aloha! You are in the MauiTrader’s Lounge
[2007.12.13 09:18:15] MauiTrader has entered the room “MauiTrader’s Lounge”
[2007.12.13 09:18:18] MauiTrader: WTF!!!!!!
[2007.12.13 09:18:21] MauiTrader: ANYWAYS
[2007.12.13 09:18:29] MauiTrader: I JSUT SAVEDD MY ASS A LOT OF HEARTACKE
[2007.12.13 09:18:33] MauiTrader: AMAZING
[2007.12.13 09:18:37] MauiTrader: ASYS IS DOWN 30%
[2007.12.13 09:18:43] MauiTrader: WHICH IS 60% ON MARGIN
[2007.12.13 09:18:51] MauiTrader: AND 120% ON IB MARGIN
[2007.12.13 09:19:07] MauiTrader: WHICH WOULD HAVE KILLED OVER 30% OF MY ACCOUNTS
[2007.12.13 09:19:32] MauiTrader: SO BY CUTTING MY LOSSES AND GETTING THE HELL OU TOF DODGE
[2007.12.13 09:19:42] MauiTrader: INSTEAD I HAD NO CLUE THIS NOW POS STOCK HAD ANY DAMAGE
[2007.12.13 09:19:49] MauiTrader: BECAUSE MY SHORTS ARE ROCKING
[2007.12.13 09:20:17] MauiTrader: IMAGINE IF I WOULD NOT HAVE TAKEN THOSE SHORTS AFTER THAT BAD DAY; IMAGINE IF I AM SO DEPRESSED I DONT TAKE THESE SHORTS OR SELL MY ASYS
[2007.12.13 09:20:22] MauiTrader: NOT ONLY DO I LOSE MONEY ON ASYS
[2007.12.13 09:20:29] MauiTrader: I LOSE MONEY BY NOT MAKING MONEY IN THE SHORTS
[2007.12.13 09:20:36] MauiTrader: THIS IS REALLY AN AMAZING LESSON TO BE LEARNED
[2007.12.13 09:20:55] MauiTrader: AND THAT NO ONE IS AROUND (9 PEOPLE ARE HERE BUT NO ONE SAID ANYTHING ABOUT THIS) IS BAD
[2007.12.13 09:21:00] MauiTrader: I HOPE YOU ALL READ THIS LATER
[2007.12.13 09:21:08] MauiTrader: ACTUALLY I AM GOING TO POST THIS ON THE BLOG
[2007.12.13 09:21:10] MauiTrader:

When all the selling was done, the Nasdaq led the way below with a 1.3% decline falling right back below the 50 dma, the SP 500 and SP 600 followed with 1.1% declines, and the DJIA fell 119 points or .95%. The worst of the selling hit leading stocks, with the IBD 100 falling 1.7%.

Volume was slightly lower on the Nasdaq, giving a bit of comfort to the nasty decline. On the NYSE volume was much higher, giving this index another clear distribution day.

Breadth was downright horrible. Decliners beat advancers by a 2.5-to-1 margin on the Nasdaq and by a 3-to-1 margin on the NYSE.

What else is there to say about today except that today was ugly. Reversing the gains that we made yesterday, with the Nasdaq and SP 600 falling back below the 50 dma is not good. However, when I went through all my stocks tonight I found very few to completely sell. The huge losses, you would have thought, would have forced me to sell a lot of stocks that completely failed moves. But that did not happen. Most of the stocks that had to be cut were also completely speculative as the true leaders are still holding their 50 dma’s.

So while I have all my stocks holding key support, I have to take into account that the market is weakening. That is why I have been taking profits on stocks that make big one day gains and taking partial losses on stocks that immediately do not follow through. But overall I have a lot of stocks that are still holding support so there is nothing for me to panic over.

Saying that, the Nasdaq has had 3 distribution days in the past four weeks and the NYSE has had three also during that time. A couple more of these and the indexes under the 50 dma, along with more stocks breaking down on high volume and I will have something to worry about. Being prepared is the best defense against a possible correction if one is coming.

If we have to take recent earnings reports of how things are in the economy, they are clearly telling us that it is slowing. This is turning out to be the first quarter where earnings did not rise double digits since 2002. The stock market is forward looking and if it starts rolling over, we can conclude that the inverted yield curve and slowing economic numbers are finally catching up to stocks.

Overall, it is really hard to form a concrete opinion on the market right now. i am neither bullish or bearish but I am keeping a bullish bias simply because I still have many stocks in clear uptrends. However, my new buys have either done really well or have reversed and let me out very quickly. Things have definitely gotten rocky out there but not scary yet.

I wouldn’t be surprised if selling hit the market tomorrow but at the same time it sure shouldn’t shock anyone if the Nasdaq and SP 600 retake the 50 dma. The only thing certain right now is uncertainty. I saw today that the AAII bulls is at 39% with bears coming in at 33%. That clearly tells me that there are another large group of traders just on the sidelines. That indicates to me that we could be in some choppy action for a little while. With bulls and bears in a tug-of-war some sideways movement would not be surprising either. Bottom line the market is not to be messed with here.

Keep your new buys small, cut your losses fast if your stock does not work out immediately, don’t let big winners turn into losers, take profits on the way up, and do not use margin at this stage in the game. It is not time to short either. Right now, playing the market is like playing with fire–it doesn’t end well usually.

The bears are starting to gain some control but the bulls still have control of the major trend. We shall see how we end the week tomorrow. Aloha and I will see you in the chat room. Be careful out there!!

On the very last trading day of the year, stocks decided to end the year on a slightly nasty note, offering distribution days across the board. There was no news catalyst on this Friday the last trading day of 2006. The only possible reason for the selling that was floating around the street was the fact that traders might not want to be long over the long weekend. My question is: wouldn’t they also not want to be short? Oh well.

At the close, the SP 600 led stocks lower with a .9% hit, the SP 500 gave up .5%, the Nasdaq lost .4%, and the DJIA being the leader it is only lost .3%. Leading stocks joined the SP 600, leading to the downside. The IBD 100 and IBD 85-85 index both fell .8%.

Volume was higher on the NYSE and the Nasdaq, giving both indexes a distribution day. Volume came in well below the 50 day volume average, continuing the trend of volume this Holiday short week. This is the first day of distribution on the NYSE in the past four weeks and was the third disribution day in four weeks on the Nasdaq.

Normally, the selling wouldn’t bother me but the fact that volume grew on a day when volume should have come in lighter and the fact that the indexes finished at or near the lows of the day throws up some warning signals to watch out for further weakness as we head into the new year.

Breadth was negative on the NYSE by a 5-to-3 margin and negative on the Nasdaq by a 3-to-2 margin. It was not that bad, considering the losses on the SP 600 and IBD 100.

Overall, it was a solid week. The DJIA gained 1%, the SP 600 rallied .8%, the Nasdaq gained .6%, and the SP 500 rose .5%. Even though I wanted a light volume pullback and did not get it, the small gains offer comfort that the bulls didn’t shoot the lights out only to have the bears knock them back down. Also if we combine the last two weeks, you can see the market pulled back, across the board, on low volume. PERFECT…so far.

For the year, it doesn’t get much better than what we witnessed. The DJIA was up 16%, the SP 500 and SP 600 rose 13%, and the Nasdaq gained 9%. Personally, for me, I still consider it a disappointing year as HOT stocks did not act like HOT stocks normally act during a strong bull market. The rally from the June-Aug lows did not have the same kind of explosive growth as in normally seen in bull cycles. However, in an environment of lower volatility (check the VIX), overall, this is to be expected.

This was a tought year, for your’s truly. I have managed only a 40% return and that is borderline shameful if you ask me. I had way too many great stocks make 100% plus runs left and right but by taking too much risk in cheap/loser stocks under $10 and not concentrating more into the beautiful high quality charts my portfolio suffered.

As the year went on I did adjust and went back to my style of 2003. Where I would take up to 3-5% of the best stocks and buy less of the cheap beauties. It did work out well, after the market started moving higher again in July. But because the rally was so iffy, I did not concentrate money like I normally do at the beginning of a “real” rally.

The rally off the October 2005 bottom offered TONS of quality stocks offering 100% plus gains left and right. This rally from July did not. Why? Because big caps led. Big caps simply do not rocket the way smaller stocks do and that is what happened. The lack of leadership by leading stocks off the July lows hurt my year end performance.

However, thanks to a great rally from October to May, I was able to beat the market by 2x the return of the top index. That has always been my goal and continues to be. Also the goal is to finish within the top 5% of growth mutual funds. If I do these things, every year, I am happy. For the fifth year in a row I am very happy.

This was a wild market this year with not a lot of volatility but a lot of confusion. The constant political backdrop, without a doubt, had a major impact. The liberal media continued to bash everything about the economy and that caused MANY people to doubt the market and miss out on another year of gains. Just like they did in 2003. The “I hate GWB” crowd never gets it right. And they definitely got it wrong this year just like they got it wrong in 2003 when they said his tax cuts would wreck the economy. WRONG AGAIN. LIKE ALWAYS!!

If you stayed disciplined, cut losses, let your winners run, and ignored the liberal media, you without a doubt had a great year. Next year should treat you right, as long as you keep playing by those disciplined rules. Proper buy and sell rules will ALWAYS beat opinions. Remember, opinions are like assholes…we all have them, they stink, and nothing but mess comes from them.

There is a point James “RevShark” DePorre made in his realmoney.com blog post that I want to re-post here because it is the truth: “Although the indices were up nicely in 2006 it was not an easy year for market participants. The character of the advance was quite different than anything we have seen in the last 10 years and it caught many folks by surprise. The average hedge fund failed to outperform, as did many individuals. In general there was a lot of underperformance this year.”

If you followed me at all this year, you can go to my blog and review my post on every twist and turn the market gave this year. I was there and took the appropriate action EVERY time. It has been this way since 2000 and it will never change. I never pay attention to anything anybody ever says. I take all my clues from the market. And if you have been reading this blog since March 2005, you will see I just simply never missed a turn by simply reading the general stock market indexes and looking at leading stocks everyday.

This will never change and the market will always give EVERYBODY profits if they just learn how to go with the trend and learn the important battles rules that are necessary to get this game down.

It is like everything else in life. The more time and effort you put into something the better you will do at it. Trading stocks is the same way. If you follow the CANSLIM rules and practice over and over you will eventually become a very powerful individual investor. If my dumb-a** can do it. You can do it. I have no college education. My only education came from the school of hard knocks. The tuition was much lower than what you paid to go to college and grad school, trust me.

With that I want to wish everyone a great 2007. This is the last free post EVER on this blog. I want to thank everyone for reading and I hope I see you at the paid site. It is not that expensive and if you can not afford $100 a month for convo or $60 a month for stock picks…well son you shouldn’t be trading stocks at all then.

Aloha, God bless, thank you everyone for all your fantastic support and comments along the way. I wish you agreat 2007. AAALLLOOOHHHAAAA!!!!!!!!!!!!

I will see you at the new Investors Paradise. It is not up yet, but by Wednesday we will be ready to go. ALOHA!!

The stock market will be closed not only on Monday but on Tuesday as well, next week. In observance of former President Gerald Ford’s funeral. This will be first incident of markets closing for four days since the disgusting terrorist attacks of September 11, 2001. This time, however, you can enjoy the market’s closure. I know I will.

Investors Paradise.

New Swing Longs: AZL CAAS GOAM

Adding To Longs: AOI

Longs Up On The Day: PTT-131 JST-95 ININ-28 BMA-35 PCCC-34 CHINA-83 STEC-92 CXW-34 AOI-38 DECK-27 BAM-54 AMOT SMOD SRSL CVLT JSDA BTJ UAUA SQM IWOV IMKTA CCCO CNH IFOX PCC AMSF ACTU AB NRF NU ISLN MBLX ACHN HINT EXLS LYTS CRNT ONT CTDC NHP STZ ZNH MXIC WGA INMD OME EPHC ABCB RIV

Stocks That Caught My Eye But I Don’ Want To Be Long: ENCO ICON PMD GMKT TPTX DBTK DVR BRR CRZ DEI NETC GT EDA ANO HELE AIXG CPY

Partial Profits/Losses Need To Be Taken: WSH WAUW PSMT RVSB AOB IMGN TRBN OSIR SVNT TGEN

Complete Profits/Losses Need To Be Taken: AW CBF LCC