The BWT models are under an across the board NEUTRAL condition. This is a cosmetic signal as we remain very fluid currently. This means that our models are prone to switching to a SELL signal at the first sign of serious distribution at resistance. As it is, all of the major market averages, outside of the Russell 2000, have retaken their September resistance levels and have confirmed the retake on Thursday with some minor follow-through to the upside on Friday.
Technically, following the recent selling, our models would not switch with a low volume retake of the 50 day moving average until the 50 day moving average begins to trend higher again. However, seasonally we are heading into one of the more bullish times of the year and since low volume on the upside is the new norm post-2008 we are going to go ahead and assume a more neutral stance here overall. This means that we will look to increase the size of new long positions as each new signal dictates.
Right now, the current situation with individual stocks is not that great. We do have some leadership out there but most of it is coming from the Oil, Gold, Metals, and Food related industry groups. This kind of leadership does not bode well for an exciting new uptrend. We will need to see further leadership show up or else we definitely run the risk of staying choppy (basically going nowhere) or resuming our downtrend.
This is why we continue to operate with minimal size in any new long position and will continue to do so until either volume enters the overall market on the upside and/or better technical patterns in leading stocks emerge. As long as the quality of technical patterns in the market remains as it is, cash will continue to be our largest position in this market like it has been since July.
As we head into the weak, our assets are allocated around 65-70% cash, 25-30% long, and 5% short with an overall neutral bias towards the general market. We wish you the best during the upcoming trading week. Aloha.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – SIGNAL DATE
ANAC long – 215% – 1/20/15
PAYC long – 140% – 10/30/14
SKX long – 125% – 1/26/15
COKE long – 69% – 6/16/15
APDN long – 57% – 10/2/15
EPAM long – 28% – 4/2/15
BIS long – 25% – 8/6/15
