From the Trading Desk

Big Wave Trading Portfolio Update And Top Current Holdings

The Big Wave Trading Portfolio remains under a BUY condition, despite the harsh sell off this past Wednesday. During such a strong uptrend with the averages constantly riding the 5, 10, 20, and 50 day moving averages higher, it will take more than a one day sell off event to switch our model. The only time a one day sell off would switch the model from BUY to NEUTRAL, in such a strong uptrend, would be if that sell off resulted in a loss of the 10, 20, and/or 50 day moving average on extremely strong volume.

Since that was not the case on Wednesday, we remain under a BUY condition. The price action that has followed this session has been very constructive in all major market indexes and leading stocks appear to have weathered the sell off very well so far. For now, this is strong confirmation that the uptrend is still solid. We do understand that this could easily change very shortly if further selling does appear. However, skilled market operators understand that you can not make money on “what-if” scenarios. So for now, the trend remains up and we will continue to hunt for new long positions as signals arise.

The intraday price action of Thursday and Friday was very constructive following the sell off, with the market opening lower and closing higher near the highs of the day on both sessions. This action, along with the lack of stocks breaking down in my short scans, is indicative of a market that wants to still move higher here. Another positive sign, for those long in the uptrend, is that very few holdings gave partial sell or full sell signals the past three market sessions. In fact, on Wednesday there was only one full sell, following that big sell off. So overall there remains very few real factual based reasons to turn fully bearish here. Have we started to hedge our positions? Yes. But only in a very minor manner.

That being said, if we do reverse lower here, we are ready to increase our hedges and will take action on all sell signals that will generate on a pullback in the overall market. While we are indeed ready to increase our hedges, get short, and pair down our winners, we will wait for the market to tell us to do this. Right now, we want to be like water in a river. Smoothly flowing with the market in whatever direction it decides to go.

Have a continued wonderful long weekend everyone. I wish you the best in the upcoming week. Aloha!

Top Current Holdings – Percent Return Since Signal Date – Date of Signal

EAC long – 196% – 12/17/12
HIMX long – 192% – 12/19/12
CAMP long – 123% – 4/26/12
CSU long – 113% – 9/4/12
RVLT long – 111% – 3/26/13
POWR long – 107% – 12/11/12
FLT long – 85% – 9/6/12
HEES long – 81% – 9/4/12
WAGE long – 73% – 1/8/13
ASTM short – 73% – 7/17/12
INSM long – 72% – 4/19/13
GNMK long – 69% – 11/16/12
SBGI long – 46% – 3/22/13
WDC long – 42% – 1/9/13
V long – 40% – 8/31/12
BBSI long – 38% – 2/13/13
CHUY long – 33% – 1/10/13
ADUS long – 31% – 4/22/13
PFBI long – 31% – 11/19/12
GLL long – 30% – 2/14/13
VIPS long – 28% – 3/14/13
GMCR long – 27% – 4/23/13
AMWD long – 27% – 2/1/13
ADS long – 25% – 12/11/12

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