The Big Wave Trading models remain under an across-the-board operational BUY signal with nothing weighing on our models except the short-term overbought conditions in the multiple oscillators we track. Those short-term overbought readings have been semi-noise as the indexes continue to hit new highs despite these readings. Another positive for those long equities is that we continue to work off the overbought conditions as we rally. The bad news, short-term, is that we are only now starting to roll over on most of my oscillators meaning that more backing and filling, price consolidation, and/or selling should be expected.
If we do continue to consolidate the recent gains following the pull back from the Friday morning highs, we will know if the pullback is healthy or not via the price action in our individual holdings and leading stocks. If our holdings continue to hold up well in the midst of selling, then you know intermediate term prices should continue higher as the action in price is telling us there is a bid to the market. If our holdings trigger our trailing Sell Stops one by one getting us heavily cash, then you know something more severe is in order. Following the reversal off the highs on Friday, only a few stocks truly disappointed in our fully invested portfolios.
These few disappointments were met by a new long signal and a strong add signal on Friday. If there would not have been any new signals on Friday or if more of my stocks would have triggered reversal price/volume bars then I’d be concerned about a short-term top here. As it is, there is no evidence we are topping out at all. One day of churning is not a new trend. As long as we see new signals and bases forming in leading stocks, we will see any pullback as an opportunity to rotate out of our weak holdings and move them into our stronger holdings (like those listed below) and/or new stocks producing actionable long signals.
We are not in the business to try to outhink this stock market uptrend. No volume, no liquidity under the NBBO, extreme price moves, and passionate bulls and bears make it for an interesting time to do this for a living. The good news is that with proper entry points, proper stock selection, proper risk modeling, proper position sizing, and proper trailing Sell Stops it doesn’t matter who is trading the market and why they are trading it the way they are trading it. The only thing that matters is how you are trading it. With the proper rules we set out at Big Wave Trading success, in time, success is guaranteed.
Enjoy the rest of your weekend and I wish you all the best as we head into Thanksgiving Day on this upcoming holiday shortened week. Aloha from the beautiful west side of Maui where it is still very warm and sunny.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – DATE OF SIGNAL
VIPS long – +533% – 7/17/13
OVAS long – +141% – 8/8/14
VDSI long – +88% – 8/4/14
AGIO long – +88% – 9/24/14
PAYC long – +52% – 10/30/14
RENT long – +41% – 9/24/14
RUBI long – +28% – 10/29/14
ok…but what are the rest of your holdings?
Subscribe or take a trial and find out. The other holdings are clearly up less than 25% so far. So how much money are we losing when we are wrong? Very little. We always cut our losses and carry hard Sell Stops on the books. When we go long or short something it has to work immediately or we are out. We don’t lose money. The winners take care of themselves. We have been doing this for 16+ years. Out of 60 holdings in 2 portfolios (we are fully invested) we have only 6 losers. The worst holding is now down 7% and is a 75% sell on Friday morning. The rest of our losers are down less than 2%. I post every buy and sell before I enter my own personal orders and give the price level where everyone should set their Sell Stops. Don’t be so cynical. Take a free trial and see for yourself. We now have nine holdings up over 25% since our long signals. This section will be updated next on Sunday. Aloha, YNot.
Thanks for the primer Joshua. But I am newly subscribed I protest, even if I am, or sound cynical. I was wondering if you have a portfolio list, or are you suggesting to comb thru each day’s position commentary. So be it if that is the case — there is probably some wisdom to be gleaned in each one. After a sustained uptrend, it is probably not the best strategy to take on new positions in your big winners, right? Or perhaps taking an initial position when you add to your existing ones, along with your new reco’s? I’ll stick around for awhile — probably not prudent to try and build a portfolio overnight.
I like your protest! No worries. Well, you have to realize right now that we are very overbought off the lows short-term. This means taking new positions here is riskier than it would be when my momentum oscillators are near their lows. We are already fully invested. To play catch up is dangerous here unless you have tight Sell Stops. As long as you have tight Sell Stops sure. So you are correct in assuming it would not be wise to initiate fresh positions in stocks that are extended from their 50 and 200 day moving averages. That being said, as you can see in this Friday’s post there are a ton of stocks ready for breakouts. I am setting my Buy Stops accordingly. I will post the current holdings on Monday. I will also see if I can’t get permission from my web technician to upload my Telechart file that carries this list. I can also do a screen shot. Yeah I’ll do that! I post every buy and sell so you can also track them on your own at home in Excel. Another reminder is that we are currently holding a ton of longs due to the fact that our “hot” charts still aren’t forming, the market is trading on overall low volume, and underneath the NBBO Level 1 there is no liquidity. An ideal portfolio will only have anywhere from 5-20 stocks. Not 30-40 like we do currently. However, the fact we have that many long signals tells you there is plenty of action out there. Too bad the signals aren’t clean 85% of the time. Aloha, YNot. Have a great rest of your weekend.