The Big Wave Trading Model is under a mixed bag of signals as US stock indexes are all doing something different. The Nasdaq is back to a NEUTRAL signal as it has undercut its 50 and 200 DMA. However, it is not switching to a SELL signal due to the low volume on the move lower. Considering we are well above the November lows and that we just came from a holiday shortened week where volume was well below average it can not be considered a high reward/low risk area to short this index. Therefore, for now, we are NEUTRAL. Overall, a daily and weekly chart of the index still shows a very solid price setup for further possible upside.
The DJIA and SP 500 have rolled back below their 50 day moving averages and the DJIA took out its 200 DMA. Once again, the low volume rollover prevents the indexes from switching to a SELL signal. However, these two indexes are very weak and their respective ETFs (DIA and SPY) did see three days of above average volume on down sessions. That is not good and if the indexes try to rally and then fail around the levels of their breakdown these two indexes will definitely switch to a SELL signal.
The Russell 2000 and NYSE both remain under a BUY signal as both averages are trending above the 50 and 200 DMAs. As long as these indexes are trending above the 50 DMA they will remain under a BUY signal. However, due to the weakness in the three main indexes, they are obviously on watch.
Right now, cash remains king, as we await a resolution of all of this Fiscal Cliff noise. I hope everyone had a great Christmas/holiday season and we wish you the best as we head into the new year. Aloha everyone and have a wonderful and happy New Year’s eve and New Year’s day. Once again, aloha!
