Stocks continued their strong uptrend the past week but on Friday we finally saw a day of distribution hit the entire market that suggest prices could pull in here. The pullback on Friday was to be expected as the Nasdaq was up 10 sessions in a row with the last six sessions higher on below average volume. Not only was the Nasdaq overbought but all of my oscillators that I track in all of the major market indexes have moved into overbought territory. When this happens in the indexes, further price appreciation is usually limited and choppy.

However, one day is not going to put a monkey wrench into this uptrend. We are going to stay reactive here and let our stops take us out if things turn ugly on the short-term. As of right now, we remain under a strong uptrend across the board with only Friday’s distribution day now weighing on the models. Individual stocks, following our nightly scans on Friday, continue to look great with very few stocks breaking down or looking weak enough to make us nervous here.

As you can see below, we have quite a few long positions that are up quite a bit. This represents about half of our portfolios currently and is one hell of a testament to the strength of trend following methodologies in trending markets. Considering we are long so many individual names in our portfolios and they are all doing very well is a testament to the quality of our long selections. While we have many losers we always cut our losses fast and never ever take big hits. Using stop loss orders on every single trade prevents a big loss ever.

Now that the trend is firmly in place we are starting to be rewarded for our longer term EOD methodology that holds for longer time frames. Unfortunately, still, the theme of lame returns continue. Ever since 2008 we continue to not see the bang for the buck that we were used to seeing before the 2009 rally started. Huge gains in very short amounts of time continue to defy us on an EOD basis.

Stocks don’t move 20% in two weeks, 50% in two months, and 500% in one year anymore. We are lucky if we get 20% in four weeks, 50% in six months, and 200% in a year. Unfortunately, as long as the returns on an EOD basis remain this lackluster we will continue to focus on intraday earnings and contract winners on the long side and pump/dumps on the short side.

For now, all trends remain up and we remain under an operational BUY signal across the board. We shall see what the market has in store this week. With the overbought conditions in my oscillators, it would not surprise me to see us pullback further. However, nothing says that we can’t stay overbought longer than the shorts can stay solvent. As long as interest rates are not rising, there is only one game for yield in town. I’ll see you in the chat room on Monday. Thank you. Aloha.

TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL – SIGNAL DATE

VIPS long – +582% – 7/17/13
OVAS long – +350% – 8/8/14
AGIO long – +113% – 9/24/14
PAYC long – +80% – 10/30/14
VDSI long – +80% – 8/4/14
RUBI long – +64% – 10/29/14
SWKS long – +57% – 10/28/14
CVTI long – +52% – 11/3/14
AVGO long – +51% – 10/28/14
VRX long – +44% – 11/17/14
EA long – +38% – 11/10/14
SERV long – +37% – 11/7/14
CBPO long – +36% – 10/24/14
ANAC long – +30% – 1/8/15
PANW long – +30% – 11/10/14