The operational model and portfolio management at Big Wave Trading remains under a NEUTRAL to soft-BUY condition across the board. The DJIA and SPX are under BUY conditions and the rest of the major market indexes are currently under a NEUTRAL condition. The RUT, NDX, COMPQ, and NYSE will switch back to operational BUY modes once each indexes closes at a new 52-week high. Despite the NEUTRAL condition, individual stocks remain extremely strong the past week and our portfolios remain fully invested.
The name of the game the past past few weeks has been the same. Rotation. We are currently fully invested with trading idea after trading idea appearing on a daily basis. There is no shortage of extremely high quality stocks producing actionable patterns that offer up wonderful reward to limited risk ratios. While volume is lame, liquidity is lame, and the AAII/II surveys show a lot of bulls, the overall uptrend has been quite friendly offering us plenty of top quality stocks that are outperforming the overall market.
We will continue to take our signals for the action of leading stocks. While the indexes might have their liquidity and volume issues which were on display in some stocks we watch like AAPL on Monday and a to a lesser degree a current holding of ours on Friday, we will continue to take our signals in leading stocks. These stocks do not have the volume issues that the major market averages have had basically all 2014 long. We continue to receive a ton of heavy volume breakout/bounce signals and as long as they exist, we will let the illiquidity and low volume issues remain nothing more than a talking point.
We are in the middle of a historically bullish time of the year in the middle of a historically bullish period for a 4-year and 8-year Presidential cycle. We are students of history at Big Wave Trading and we realize how foolish it is to try to not only top call markets but top call markets during seasonally bullish cycles. I continue to see some traders do this on social media. As long as they are doing this and I still do not have all of my family/friends saying they just need to buy stocks right now we will continue to go along with the trend of price.
Top calling markets in a non-interest rate rising environment has never made sense to me and it never will. When we either get an inverted yield curve or a series of successive interest rate hikes, then and only then will top calling make any potential sense to us. Even then, until price confirms the potential threat to an uptrend, we will still buy them if they are rallying. Rising interest rates, everyone invested, and prices of the major market indexes and every leading stock breaking. That is what you look for in a topping market. Not new all-time highs in the DJIA and SPX on a daily basis with the NDX, COMPQ, RUT, and NYSE a few percentage points behind.
Enjoy the rest of your weekend everyone. Thank you. Aloha from the beautiful island of Maui.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL – DATE OF SIGNAL
VIPS long – +520% – 7/17/13
OVAS long – +189% – 8/8/14
AGIO long – +111% – 9/24/14
VDSI long – +104% – 8/4/14
PAYC long – +54% – 10/30/14
RENT long – +35% – 9/24/14
TASR long – +31% – 11/10/14
RUBI long – +27% – 10/29/14
CVTI long – +25% – 11/3/14
SWKS long – +25% – 10/29/14
