Happy Labor Day everyone. I hope every is having a nice long three-day weekend. The Big Wave Trading models are under SELL conditions across the board as the current bounce off the 8/24 lows continues to lack any real price or volume momentum. This is no surprise as we are in the month of September which is historically/seasonally the worst month of the year. When price is confirming seasonality, we recommend not fighting the trend.

While the market tries to find some support, the bulls can take some solace in the recent sentiment numbers. The NAAIM allocation is down to 24% long. This reading got as low as 9 back in October 2014 so it is no where near extreme fear levels yet. The Investors Intelligence survey came in at 27% bulls to 26% bears. While this is getting closer to a cross and the bulls are at 5-year lows we are still far away from the bears 5-year high of 45%. The AAII survey is basically even at 32% with neutral coming in at 36%. None of these readings are extreme yet but they are moving in the right direction.

For now, the market remains range bound in between the 8/24 lows and the 8/28 highs. Until this price range is broken either higher or lower, it is smart to stay open minded here. This market could easily move higher or lower. The current trend is down and leading stocks are broken on heavy volume across the board. That is indicative of a market that has further room to sell off. However, since 2008 the tape has had a knack of doing the exact opposite of what our models dictate it should do when the tape does look like it is about roll over hard. So we will keep an open mind here.

That being said, as we head into the trading week, we are net short this market (our remaining long positions listed below are fractions of their original size) with significant gains already realized in our TVIX position. With the overall intermediate trend clearly down, our short positions in the money across the board, and with zero actionable long signals triggering or setting up, it appears we have more downside to come. If we reverse higher, we have our buy stops on our short positions, and at worst will leave with small gains. As a reminder, gains are never allowed to turn into losses at Big Wave Trading. It is not allowed.

Have a great rest of your long weekend everyone. Remember, if you are having difficulties navigating the current tape and find the price action confusing, come give us a try with a free trial. We know how to navigate these markets, not force trades for trading sakes, and know when it is time to step back into the long side of the market with full leverage. This summer time slop will not last forever. Aloha from the island of Maui where the only storm(s) I am concerned about are the tropical storms and hurricanes surrounding our tiny little island.

TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – SIGNAL DATE

ANAC long – 286% – 1/20/15
SKX long – 127% – 1/26/15
TVIX long – 124% – 8/20/15
PAYC long – 108% – 10/30/14
TREE long – 70% – 6/2/15
DXCM long – 62% – 12/3/14
ADPT long – 55% – 5/18/15
FIX long – 47% – 3/11/15
SERV long – 38% – 11/7/14
AVOL long – 38% – 4/21/15
ABMD long – 37% – 7/10/15
AMSG long – 35% – 2/26/15
COKE long – 26% – 6/16/15
SRTY long – 26% – 7/23/15
LHCG long – 26% – 6/11/15