The Big Wave Trading portfolio models are under a mixed set of conditions with the COMPQ, NDX, and RUT under operational NEUTRAL conditions and the SPX, NYA, DJIA, and DJT under operational SELL conditions. Despite the NEUTRAL/SELL conditions, the Big Wave Trading portfolio remains fully invested with our portfolio breaking down 92% long and 8% short. This continues to be one of the most mixed operational models our portfolios have seen since trading started on my end in 1996. We have only been operating the operational models since 2007 but this is still unprecedented.
Usually when our models are under NEUTRAL/SELL conditions we are not fully invested on the long side. However, despite the pullback the past two weeks, we have seen very few full sell signals trigger in our holdings. In fact, as you can see just by checking out a daily/weekly chart of the names listed below it is clear that the past two weeks of selling has barely left any damage in any of the names you see. This is why we stress the importance of trading via rules instead of emotions. If we traded emotionally, based on all the headlines we saw the past two weeks, we would probably be mostly in cash and/or short the indexes.
As it is, we have obeyed our time tested rules and obeyed our sell stops. If the sell stops do not trigger, we remain long. It does not matter how bearish the talking heads become in various media outlets. All that matters to us is those stop levels below the most recent important support levels. If those are not taken out, no matter what the overall market is doing, we are going to remain long any holding still trending higher. If the market tops out, you can be sure our stops will be hit and we will be back to cash. For now, selling for the sake of selling seems like an amateur decision based on our technical setups.
Now, outside of our own personal holdings I must admit that my long scans still do not look that great. There is a lot of short-term damage and while our holdings look fine I am finding it very difficult to find too many “beautiful” or “well formed” technical patterns in new potential long positions. There have been some new long signals, despite the sell off lately, and they have been mixed. I received two new long signals in high quality stocks the past week and both are working. We also have two more high quality long signals for Monday. If they work, that will be further confirmation that the uptrend might want to start up again.
If every new long position that was triggering an actionable signal was failing right away, you can be sure we would stop taking new long signals. As it is, we continue to see high quality names trigger and they are, for now, working. The only operational difference here is that we are keeping our new long positions very small (like that matters as we are already low on cash due to being fully invested) and we will not be increasing the size by much until we can get more definitive proof that the market wants to rally higher here. Just because we are under a NEUTRAL/SELL operational condition in our models does not mean that we have any bias to that direction. We keep an open mind and are prepared for absolutely everything at Big Wave Trading. There is no cognitive biases here.
So on that note we head into the new week not expecting much. We would obviously love to see us continue to find support for our long positions. This would allow our long positions to accrue more capital gains. It will also knock us out of our hedges with small losses and let us take that capital and place it in a fresh round of new leaders. If, however, the market wants to continue to sell off, we will continue to increase our short/hedge positions and we will obey our sell stops in our long positions as they are crossed. We recommend keeping it simple and keeping an open mind this summer. It’s too muddy to be confident on one direction or another here.
Have a great rest of your weekend and we wish you the best during the upcoming trading week. If you are not seeing the gains you see below in your own personal account holdings and/or have a tough time holding on for the big gains feel free to take a free trial with us. I am 100% sure you will not regret it. Have a great week and aloha from an extremely hot and sunny west side of Maui.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – DATE OF SIGNAL
ANAC long – +145% – 1/20/15
AGIO long – +118% – 9/24/14
CBPO long – +98% – 10/24/14
PAYC long – +97% – 10/30/14
SKX long – +97% – 1/26/15
VDSI long – +92% – 8/4/14
SWKS long – +79% – 10/28/14
EA long – +74% – 11/10/14
EGRX long – +72% – 4/9/15
GIMO long – +72% – 2/2/15
VRX long – +69% – 11/17/14
BLUE long – +65% – 2/25/15
PANW long – +65% – 11/10/14
AVGO long – +54% – 10/28/14
RCPT long – +54% – 2/20/15
ADPT long – +50% – 5/18/15
SERV long – +47% – 11/7/14
SUPN long – +34% – 5/22/15
RDUS long – +32% – 6/17/15
AMBA long – +31% – 5/14/15
COKE long – +31% – 6/16/15
LJPC long – +30% – 6/26/15
TERP long – +29% – 1/16/15
DXCM long – +29% – 4/2/15
DRRX long – +29% – 4/8/15
AMAG long – +26% – 5/6/15
AYI long – +25% – 1/23/15
