The Big Wave Trading Portfolio is back under a BUY signal, following the strong showing of individual stocks on Monday and the return of the Russell 2000 and Nasdaq leading the market on a Relative Strength basis.
The most important thing to me is how individual stocks are acting and on that note I saw a complete turnaround in chart patterns following Monday’s (2/17) sessions. Since then, earnings season has been decent with many buyable gap ups working including the best one this week on Friday SSTK. With buyable gap ups working, breakouts working in leading stocks, and healthy consolidation patterns forming the market does appear to be back on track on the very short term. This being said, we will not be surprised if we breakdown here either. The most important thing in this game is to be ready for all outcomes and already have a game plan mapped out before hand.
If everything works out the way it is shaping up here, we should see the market eventually break out to new highs. We have enough earnings winners and breakouts on heavy volume that you would think that the indexes should follow all of this positive action. However, since they are not it means one of two things. We have a rotation of leadership going on (Biotech is still holding up as the leader which makes this scenario more plausible) or we are biding our time before the next move lower. Just last week I would have thought it would be lower but the recent strength in some defensive sectors names has quickly reversed. This should be bullish for the market.
Overall, for now, everything seems good. The overall condition of the market indexes is NEUTRAL but I am under an operational BUY signal in my trading which means if I get a signal in a stock with an excellent price/volume pattern with stellar fundamentals I will increase the size of the position to 5% to 20% of my account capital. There are too many leading stocks performing well here to wait for the indexes to hit new highs.
If the indexes do reverse here, we will do what we always do. Sell our laggards, take profits when signals are given, and put on a leveraged hedge to protect the portfolio. It always pays to be prepared and ready for anything. Anything can and will happen in the stock market. Enjoy the rest of your weekend. Aloha from a very warm, sunny, and wave filled Maui.
TOP CURRENT HOLDINGS – PERCENT RETURN SINCE SIGNAL DATE – SIGNAL DATE
CAMP long – 454% – 4/26/12
POWR long – 262% – 12/11/12
WAGE long – 216% – 1/8/13
VIPS long – 207% – 7/17/13
HEES long – 158% – 9/4/12
AER long – 139% – 6/27/13
FLDM long – 127% – 8/28/13
LOCK long – 115% – 5/20/13
DDD long – 111% – 4/30/13
WDC long – 100% – 1/9/13
CMGE long – 97% – 12/16/13
CLFD long – 94% – 9/24/13
JAZZ long – 87% – 10/22/13
USCR long – 76% – 4/12/13
V long – 74% – 8/31/12
FB long – 69% – 8/23/13
TPL long – 57% – 10/21/13
GOMO long – 52% – 12/13/13
ALXN long – 46% – 11/15/13
ICLR long – 45% – 4/30/13
ARC long – 43% – 10/16/13
INO long – 34% – 12/23/13
SCTY long – 33% – 12/19/13
VRX long – 31% – 12/16/13
TRAK long – 27% – 12/9/13
