New Low-Quality Long Position: MERC (1%)

MERC – The final cut loss is with a close below the 6.35 level.

New Short Positions: TCX GLW (1%)

TCX – The final cut loss is with a close above the 1.40 level.

GLW – The final cut loss is with a close above the 13.29 level.

New Long Positions: EFU (5% in IRA)

EFU

New Short Positions: MNTG RJET (1%)

MNTG

RJET

Adding To Existing Short Positions: CLDX SNTA (1%)

CLDX

SNTA

New High-Quality Long Positions: CMN UTHR (1%)

CMN

UTHR

New Short Positions: LIVE IMMU (1%)

LIVE

IMMU

“Remember, the market is designed to fool most of the people most of the time. Sometimes, the market will go contrary to what speculators have predicted. At these times, speculators must abandon their predictions and follow the action of the market. Never argue with the tape. Markets are never wrong, but opinions often are. I only try to react to what the market is telling me by its behavior.” -Jesse Livermore

The Big Wave Trading Portfolio model remains under a SELL signal generated on 5/4/12. The SELL signal was very strong but four false signals (3 SELL, 1 BUY–first time that has happened in the model since 1979) left us gun shy from going 100% all-in on the most recent strong signal. While this is unfortunate in the IRA/Retirement account (since it can not go short), as we are under-invested in inverse ETFs that are doing very well for us, it has worked itself out in the Aggressive/Margin account. Tons of stocks have produced very strong short signals for us since 5/4/12 and almost everything we are touching is working immediately. A far departure from the past two months. We realize that the market is very oversold here and thus it would be very dangerous pushing new short positions. If the market does not get a bounce or continues to sell off, we will continue to reduce the exposure in each new short signal that we receive. If the market can manage a bounce here and the charts stay broken with no real sign of accumulation in the market or leading stocks, we will look to fully press our bets on the inverse ETFs in the Retirement account and on shorts/ETFs in the Margin account. If the market does bounce, we get some good accumulation in leading stocks, and our current shorts start giving us cover signals, we will be more than happy to get exposure to the long side. However, we believe the fact that Facebook came public in such an environment and the fact that insiders sold over 50% of their personal holdings on the first day tells us everything we need to know as it relates to the 3-year bull”shit” market. I will redirect everyone to this post on April 23rd that I wrote for Seeking Alpha. It was denied publication because of its “technical analysis” content. That sure was unfortunate for their readers as the level of bullish articles that day was extremely intense. Aloha and have a great weekend.

Current Top Holdings – Percent Return – Date of Signal

BVSN short – 69% – 3/16/12
AVD – 65% – 1/10/12
UVXY – 63% – 5/9/12
LQDT – 62% – 2/1/12
SINO short – 37% – 4/12/12
MNST – 36% – 1/13/12
VRNM short – 34% – 4/10/12
PRXI short – 28% – 3/30/12
WZE short – 25% – 4/10/12

Sidenote: I have a feeling PRKR will not be available at IB. If it is available at your brokerage account short it. I probably will not be able to. We are extremely oversold so that is why it is 2.5% and not 5% here.

New Short Positions: PRKR ARRY SGEN ZIXI (2.5%)

PRKR – The final cut loss is with a close above the 1.33 level.

ARRY – The final cut loss is with a close above the 3.79 level.

SGEN – The final cut loss is with a close above the 20.80 level.

ZIXI – The final cut loss is with a close above the 2.84 level.

New Long Positions: SPB (1%)

SPB – The final cut loss is with a close above the 33.45 level.

Update: If by some chance I can not get any of the stocks short below I will replace them with ATEC. ATEC could still be a new short. That is a big rollover breakdown. Check back in the AM. I’ll update this post with my decision after I place my orders tonight. Oh yeah and a reminder: None of these setups are perfect because we are oversold. If you want to make any of the 5%ers into a 10% or 20% or even 50% position that is on you. You figure out what you are comfortable with. I know when I should push. We would push here, if we were not so oversold.

New Short Positions: SNTA PCYC CLDX (5%) GOOG GGC ARIA (2%)

SNTA – The final cut loss is with a close above the 4.14 level.

PCYC – The final cut loss is with a close above the 29.33 level.

CLDX – The final cut loss is with a close above the 50 day moving average.

GOOG – The final cut loss is with a close above the 633.83 level.

GGC – The final cut loss is with a close above the 32.03 level.

ARIA – The final cut loss is with a close above the 17.47 level.

Adding To Existing Short Position: CMG (2%)

CMG – The final cut loss is with a close above the 406.24 level.

New Long Positions: none

none

New Low-Quality Long Position: PCYC (1%)

PCYC – The final cut loss is with a close below the 27.39 level.

Adding To Existing High-Quality Long Position: MSA (2%)

MSA – Cut your final loss with a close below the 42.40 level.

New Short Positions: FRP AEH CPO (2%)

FRP – Cut your final loss with a close above the 5.75 level.

AEH – Cut your final loss with a close above the 50 day moving average.

CPO – Cut your final loss with a close above the 55.24 level.

New High-Quality Long Position: PENN (1%)

PENN

New Low-Quality Long Position: HPP (1%)

HPP

Adding To Existing High-Quality Long Position: CHSP (1%)

CHSP

New Short Positions: PLAB URI (2%)

PLAB

URI

Adding To Existing Short Position: BECN (2%)

BECN

Night update: ACFN is not available for short sale period at IB. Trade is off. You can take it if you like. It was an overall weak day for the market with the SP500 throwing up a distribution day. Volume was lower on the Nasdaq but the ugly feel of today was still clear. A bounce toward the 50 day moving average seems very plausible here but further deteoration by retail and banks stocks today make it clear where the market wants to go right now. If it will indeed do that is totally unknown. Since there is no longer a free market and thus federal intervention could come in at any moment and turn these charts around, you have to have 0% bias to one side or the other. However, the writing is on the wall for this summer to not be a fun one for bulls. I am shocked we continue to get long signals but it isn’t like they are in the bullish tech sector. We have a food and metal stock today. We had a medical stock on Friday. It is defensive industries. Biotech is increasingly, it appears, becoming a safety zone too. How things change decade from decade. One of my favorite stocks right now basing is HXL in the Aerospace sector. We shall see if that decides to breakout. That might be our first 5%er in a long time if it does. The trend is becoming clear and we continue to build our short positions via inverse ETFs in the IRA or shorts in the margin account. Patience. Patience. The big money might be coming soon.

New High-Quality Long Positions: UNFI MUSA (1%)

UNFI – Cut your final loss with a close below the 50.38 level.

MUSA – Cut your final loss with a close below the 15.27 level.

Adding To Existing Long Position: HSFT (1%)

HSFT – Cut your final loss with a close below the 15.72 level.

New Short Positions: KEP RPRX (2%)

KEP – Cut your final loss with a close above the 9.90 level.

RPRX – Cut your final loss with a close above the 7.89 level.

“Every once in a while you must go to cash, take a break, take a vacation. Don’t try to play the market all the time. It can’t be done, too tough on the emotions.” — Jesse Livermore

“FYI – JPM $2b loss was someone’s $2b gain.” — Big Wave Trading’s second-in-command, MarketSpeculator

The Big Wave Trading Portfolio continues to be under a SELL signal triggered on 5/4. This has been the strongest SELL signal YTD as multiple confirmations in various futures/ETFs were triggered. However, due to the current choppiness of the market, possible QE3, and frequency of recent false signals, we are moving slower into our ETF positions. Still the bottom line is that the signal remains true and proper price/volume action is following. While we remain under a SELL signal we have been getting a lot of long signals from the Biotech and Housing related sectors of the market. Indeed it remains a mixed tape. There is more bad than good out there but it is still not weak enough to push short positions heavy. If there were not any long signals in quality stocks, this would have us wanting to push. Instead we will be patient and wait for real follow-through to the SELL signal that was produced on 5/4. Overall we remain like water. Very liquid and willing to move from one direction to the next until we get what we need to push us all-in on full margin. Right now, capital preservation instead of hitting home runs remains the name of the game and has been since our large gains in February were completely taken away by March and April false signals. It’s a tough environment but professional traders know that a big trend always follows. This type of tape is meant to wear you out not necessarily knock you out. Those that are patient and careful with their capital when signals are not immediately followed-through are going to do much better than wild and loose trading. If we do not break down here and instead reverse back above the indexes 50 day moving average obviously the SELL signal will be taken off. We remain under the thesis that any rally here to new highs would be even more bearish than before. Volatility is too low and breadth is too poor for any sustainable uptrend to come about. A market being lifted by a few stocks always crashes. Before we can have any real uptrend to make some real powerful gains, this market needs to correct. If QE3 comes to the rescue we believe that it will only lead to a more powerful and vicious black swan swoon. A correction here would be healthy. A rally would not. Only after a correction will we be looking to get heavily long high quality breakouts in stocks or fully long a BUY signal with leveraged ETFs.

Top Current Holdings – Percent Gain – Date of Signal

LQDT – 79% – 2/1/12
AVD – 75% – 1/10/12
BVSN short – 64% – 3/16/12
MNST – 42% – 1/13/12
ABR – 28% – 2/29/12
VRNM short – 27% – 4/10/12