The Big Wave Trading Models remain under an across the board NEUTRAL condition, despite the recent retake of the 50 day moving averages by all the major market averages outside of the NYSE. The markets are basically in a double V-shaped trading range over the past two months and despite the solid action in leading stocks we feel one would be absolutely Twitter foolish to fully embrace either the bull or bear side of the market.

We remain nearly fully invested, after taking some positions off during the sell off and then putting them right back on, as we head into the upcoming week. Do not take our fully invested position as a sign that we are bullish. We harbor no feelings toward the bull or bear side here. We only obey our signals. We continue to get a lot of long signals from a lot of leading stocks in a lot of leading industries. We are taking these trades realizing that the crowd is extremely and unreasonably bullish here.

To counteract what we consider to be cocky-bullishness from traders that do not even sport a decade of experience in the market, we are keeping extremely tight Stops on all of our new long positions. Along with this, we have a lot of positions with significant gains and we continue to raise stops to important support levels to make sure that we lock in the majority of these gains if the market decides to reverse.

This crazy new trading world that we live in post 2008 on an End of Day Trend Following basis continues to make it difficult to select the best 5 stocks we are following and then place 20% of our account capital in each position. This might work for some in this tape but with the lack of steady long term trending price movements we have had to adapt. Due to this we find ourselves long more positions than we have ever held in our portfolios.

One would think this is a problem. However, we run large portfolios and have very low priced commissions making it basically a non event outside of our time capital. The only problem is that if the market continues to be very volatile our commissions are going to become a little annoying as we adapt and trade around these volatile moves. In fact, according to the VVIX (the volatility of the volatility) we are at “crisis levels” that we see near major market turning points. Its strange that it is coming with us so near new highs.

This volatile trading with an illiquid overall market underneath the bid definitely makes it confusing for us here to completely know which way the market wants to go. We like to keep it simple. With so many leading stocks still moving higher and near all-time highs, we will continue to move with this trend. As long as the Fed is not raising interest rates, we don’t see any reason for stocks to enter a bear market here any time soon. When the Fed starts hiking rates, we will start to look for the exits. As it is, we have our Stops and they are ultimately in control. We will take all new long signals and rely on our Stops to get us out, when and if this thing ever reverses.

One thing is for sure, the amount of individuals that want to trade stocks “to get rich without doing any work” is getting absurd. I am asked on a weekly basis by people that have no business trading stocks what they should do to get the riches that the stock market is sure to bring to them this year. They honestly believe stocks are an ATM that can give them free money.

We can only hope that we get a final parabolic/climax run before the greater fool theory runs it course. Until then, we will have to continue to listen and then forget about all the extremely loud noise coming from Facebook and Twitter. It’s seriously getting ridiculous at this point. The perma bulls are louder and bolder than ever. Nobody can lose. Ever! Good luck with that in the long-term. For those that prefer to ride the moves without any bias to the direction of the market, you can see the kind of returns you can produce below without the need of any excess leverage.

It’s been a crazy start to 2015 and something tells us that this is only the icing on the cake of what is sure to be a very interesting year. Buckle up. It’s sure to be a wild ride. Thank you. Aloha from the west side of Maui where the noise of wall street still manages to make its way to my home on the beach no matter what I do to try to avoid it.

Top Current Holdings – Percent Gain Since Signal – Signal Date

VIPS long – +533% – 7/17/13
OVAS long – +396% – 8/8/14
AGIO long – +155% – 9/24/14
VDSI long – +76% – 8/4/14
KITE long – +47% – 12/17/14
PAYC long – +43% – 10/30/14
RUBI long – +43% – 10/29/14
TASR long – +38% – 11/10/14
CVTI long – +35% – 11/3/14
SWKS long – +32% – 10/28/14
TMF long – +30% – 11/24/14
PLNR long – +29% – 11/7/14