The Big Wave Trading Portfolio remains under a mixed bag of signals with only one change this past week. The SP-500 switched from an operational NEUTRAL condition to an operational BUY condition following the powerful move on Thursday. The SPX joined the COMPQ, NDX, and RUT already under an operational BUY condition. The DJIA and NYSE indexes remain under an operational NEUTRAL condition and the DJT remains under an operational SELL condition.
Despite the mixed signals, our portfolios are fully invested as we have been for quite a while now. The past four months have been choppy with the market only now breaking out to new all-time highs in the Nasdaq and Russell 2000. However, we have remained either fully invested or nearly fully invested the entire time as we continued to get new long signal after new long signal.
These long signals, as you can see below, are now starting to produce sizeable short term gains that we were used to seeing before the QE fun began in 2008. While we have enjoyed strong uptrends before we have to admit this one is a little odd in that we have received more long signals than ever before. However, those long signals technical patterns have not been as well formed or as strong as previous rallies where we received a lot of signals. High quality signals are there. Extremely high quality signals are not. It is what it is.
On Thursday, the Nasdaq, SP-500, and Russell 2000 all made large moves on well above average volume. This was the first above average volume breakout on the Russell 2000 and Nasdaq in a very long time. This positive technical action combined with the continued tempered bullish levels in the market combines for a strong catalyst for higher prices.
If the market continues higher, we will continue to ride our winners moving up our sell stops as new boxes are created. We will also continue to take new long signals as they arise, capital permitting. If we do not receive any sell signals in our holdings, we are so fully invested that we will have to start passing on signals on our end. As we noted this week in the chat room, this is a good problem to have. It means you are on the right side of the trade.
The name of the game, going into the upcoming trading week, is monitoring our winning positions. If we get any extremely high quality long signals we will look to sell off our laggards and move that capital into new potential bigger winning positions. We currently only have one holding down more than 5%. We are long more stocks than we have been in 8 years. They are all producing sizeable gains and none of them are in climax/parabolic type price moves. It’s hard to be bearish when this setup is present.
If the market stalls out and reverses, we have our stops. We never hold any losing position and we always know where we need to get out if we are wrong. It has been a pretty amazing 3-4 months leading into this weeks breakouts. The stocks below show why it is more important to follow leading sectors and stocks instead of the overall market. Leaders are going to move with or without the market. However, it is always better to have the market on your side and it appears it very well could be on our side again.
Have a great rest of your weekend and we wish you the best during the upcoming trading week. Aloha from a very sunny and warm Maui.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – DATE OF SIGNAL
VDSI long – +138% – 8/4/14
PAYC long – +114% – 10/30/14
ANAC long – +110% – 1/20/15
CBPO long – +109% – 10/24/14
AGIO long – +98% – 9/24/14
SWKS long – +97% – 10/28/14
SKX long – +85% – 1/26/15
GIMO long – +80% – 2/2/15
BLUE long – +76% – 2/25/15
AVGO long – +69% – 10/28/14
EGRX long – +69% – 4/9/15
PANW long – +68% – 11/10/14
VRX long – +66% – 11/17/14
EA long – +59% – 11/10/14
AMBA long – +57% – 5/14/15
RCPT long – +48% – 2/20/15
DRRX long – +44% – 4/8/15
SERV long – +43% – 11/7/14
RUBI long – +40% – 10/29/14
ADPT long – +36% – 5/18/15
CVTI long – +30% – 11/3/14
DRRX long – +25% – 4/8/15
