Last week was an exciting week for traders as a market that looked ready to rollover to new lows rallied hard on Monday and Wednesday with volume on Wednesday being extremely strong. Due to Monday and Wednesday the model switched back to 100% neutral and we await a follow-through day to trigger a buy signal as long positions during the most recent leg lower in November and current longs the past week are acting correctly following purchases. It has been a long time since every long has “worked.” In fact, this might be the first time, in 2011. Currently the Big Wave Trading portfolio is long 21 stocks representing 50-55% of the margin account and IRA account (margin account is also 20% short 8 stocks). Since we still are not under a buy signal no new long can be more than 5% of the account value of the portfolios. Once we are under a buy signal, the rest of the cash in the IRA will be put to work in 3x Bull ETFs. The margin account will continue to look for CANSLIM-quality breakouts and invest accordingly with the quality of pattern created. The goal is to get maxed out on the long side as soon as possible once the buy signal is generated. If we fail, like always, we cut our losses. “Losers average losers”–Paul Tutor Jones. We are not losers at Big Wave Trading. We know what it takes to make substantial profits during trending markets no matter if it is up or down. When it is choppy like it has been for almost all of 2011 gains will be hard to come by. The only properly setup trend this year was the downtrend from July to August. This short trend and the October rally has been the only two attempts that trend followers have had this year to make substantial gains. Daytraders may claim great success now but if this uptrend gains steam you can be sure they will miss the real move that produces large gains for trend followers. Trendless markets always turn into trending markets. The charts are looking better and better out there but we must remain on guard for any black swan that the government and central banks of the world are ready to throw our way.
A final reminder, Big Wave Trading NEVER holds losing stocks. If we go long and we are wrong, we are out. When we buy stocks we do so based on 200 years of price and volume history in the stock and futures markets. We expect large gains from each buy signal. When the gains do not materialize immediately, we sell. No questions asked. This is what the greatest traders (trend followers) of all-time have always done and it is the motto of Big Wave Trading: Always cut your losses ASAP!
current top holdings up over 20% since purchase — date of purchase — signal date:
currently there are none, due to the long positions all being new purchases during the past month, outside of one stock purchased in October.
