From the Trading Desk

Big Wave Trading Portfolio Update And Top Current Holdings

I am on my way out for the weekend as it is the summer solstice and a super moon weekend. Before I take a trip to Hana, I wanted to give a quick recap of the past week.

The past week was the most unusual week since 2001 as for the first time in 12+ years our model did three switches to three directions in three days. It all started on Tuesday as a breakout above the downtrend channel on the Russell 2000 and Nasdaq switched our model back into a BUY mode. The very next day, we failed that move on heavier volume. That then switched our model from that BUY signal to a NEUTRAL signal. Then in one of the more insane moves in a very long time, the model then switched to a SELL signal with every major market moving average closing below the 50 day moving average.

This then, of course, led to Friday’s big support on huge volume. The huge volume was due to quadruple witching so I would definitely not look much into today’s intraday action. This past week pretty much summed everything up as to what I expected we would see this summer following that break on 5/22. The summer chop is here and the mixed signals are back. Not only did I have sell signals throughout the week but I also had fresh new buy signals in many leading stocks. Their action was very mixed with most of the action being poor but not poor enough to be completely scared of the long side.

With that being said, we got another two fresh new buy signals in two leading stocks, on Friday. If the market was ready to completely break down I do not think we would be seeing signals during a pullback. Normally, during a pull back, new long signals dry up. During this pullback, despite a lot of stocks breaking down, we are getting long signals. This hints more of a rotation than an outright top. Still, truth be told, the verdict is still out and in a QE/POMO/ZIRP environment anything and everything must be expected.

This is definitely not the time to be a hero and if you do not have a methodology that keeps you in leading stocks during “scary” pullbacks in the indexes or do not have a methodology that at least gets you heavily hedged when things turn sour then it is probably wisest to avoid trading this market until a clear return to an uptrend is under way. Until that happens, I suggest new investors focusing on learning, reading, and studying history rather than try to game a summer-time market that is clearly bipolar. This bipolar action is all too familiar for trend followers that just lived through 2011 and 2012. Most of us knew that the smooth, quiet, and low volatility uptrend of 2013 could not last forever.

So it is what it is. A mixed market with mixed signals. If you marry the bull side or the bear side this summer, chances are you are going to be very disappointed. Stay neutral my friends. I repeat, stay neutral. Have a great summer solstice and super full moon weekend everyone. Aloha.

Top Current Holdings – Percent Gain since Signal Date – Signal Date

N/A – N/A – N/A

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