The Big Wave Trading models are all currently under a NEUTRAL operational condition. Despite the big gains last week, there was not enough breadth and volume strength in the overall market to warrant an early switch to a BUY operational condition. The first test so far is holding up with most of the major indexes breaking through there recent January resistance levels. The next test is the December resistance levels. If the indexes can break out to new highs, our models will switch to operational BUY signals.
Despite us being under a NEUTRAL condition, we remain heavily long and nearly fully invested. We continue to keep tight stops and have had to put back on trades that we have been whipped out of due to the volatility. Following all of this, however, we are nearly fully invested heading into the new trading week. While we are nearly fully invested, we are not foolishly fully invested. We have our trailing stops which are still tight across the board, due to the NEUTRAL operational condition.
If we switch to an operational BUY signal, we will loosen up our stops accordingly to the Relative Strength of the individual position. If the market and our models decided to whip us back into a SELL operational signal then obviously many of our long positions without big gains are going to hit our stops and we will be quick to raise cash as the more volatile this market becomes from here the less likely it will lead to higher prices.
If we are going to break out to new price highs we are going to have to do it soon as another whipsaw might be just enough to scare some of the embolden bulls into new found bears. It should also be noted that it is quite possible we continue to trade in a volatile manner for some time to come as we wind down earnings season. If that is the case, expect more whipsaws which will mean more small losses and more underperformance compared to the overall market. It is what it is. We have to have our stops just in case all hell breaks loose.
There are a lot of data points with mixed messages on to which way this market wants to break out to go over all of them here today. I have gone over them enough this past week in our New Positions pages. The bottom line is that despite breadth not being as strong as we would like to see it, the ADV/DEC line still looks strong, there are plenty of leading stocks with solid technical price patterns out there, and all four of the oscillators we track on all of our major market indexes are confirming this recent price rally with their respective moving averages. These are positive technical momentum indicators. We will see if we get any follow-through this week.
Have a great upcoming week. We wish you the best and hope it is a profitable one for you. Thank you. Aloha.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL – SIGNAL DATE
VIPS long – +541% – 7/17/13
OVAS long – +303% – 8/8/14
AGIO long – +114% – 9/24/14
PAYC long – +58% – 10/30/14
VDSI long – +56% – 8/4/14
SWKS long – +45% – 10/28/14
TASR long – +40% – 11/10/14
EA long – +33% – 11/10/14
CVTI long – +32% – 11/3/14
RUBI long – +31% – 10/29/14
TMF long – +29% – 11/24/14
