From the Trading Desk

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a BUY signal that was reinitiated on 3/5/13 following a quick, yet ugly, pullback. However, while we are under a BUY signal we are very cautious up in these stratospheric levels in relation to the major market indexes respective 200 day moving averages. That being said, as we know, the trend is your friend until the end when it isn’t.

Overall, the low volume new highs is problematic on a technical level and at the same time is getting problematic on a bullishness level. Before 2008 there is no time in the history of the United States stock market you could find the stock market rally on low volume to new highs, sell off on heavy volume, and then make new highs on lower volume. Yet, that has been the same pattern since 2010. Over and over. Eventually, it is going to end and when it does it will be ugly.

While there could easily be more new highs and further upside, the fact that we are getting such an extreme level of bullishness in the Investors Intelligent survey is worrisome. With bulls now at 50% and bears at 18% we have some very extreme reading seen before market pull backs. Like I said while more upside is possible, and would be welcome as per our current holdings below, we are aware of how frothy stocks look up here.

On top of the extreme level of bullishness and bearishness in the II Survey, we have seen Richard Russell go long and have seen Mila Kunis finally enter the stock market as it is clear stocks do nothing but move higher. Right? Well, we will see.

Going into this holiday-short week, we will remain cautious bulls and position any new long trend following signals accordingly. However, holding current longs and looking for exit signals is going to be the priority.

Have a great week everyone. Mahalo for reading and aloha from a Kona-wind blown-out west side of Maui.

Top Current Holdings – Percent Return – Date of Signal

CSU long – 115% – 9/4/12
CAMP long – 90% – 4/26/12
HIMX long – 76% – 12/19/12
EAC long – 72% – 12/17/12
POWR long – 71% – 12/11/12
HEES long – 71% – 9/4/12
FLT long – 56% – 9/6/12
CPSS long – 44% – 1/31/13
AXLL long – 44% – 1/4/13
WAGE long – 41% – 1/8/13
GNMK long – 37% – 11/16/12
ASTM short – 35% – 7/17/12

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