The Big Wave Trading Portfolio remains under a SELL signal on the Nasdaq, SP 500, Russell 2000, and Dow Jones Industrial Average. We have trend following signals working on some ETFs and leveraged ETFs in the stock and option market and will be looking to add to these positions as the market signals new entries.
However, we are not going to place our feelings in the trade. If the market reverses, thanks to some new federal reserve magic, we will be quick to cover our short positions and take long trend following signals as they arise.
We continue to believe that, in the current volatile market, with money printing being put to use so recklessly, that no significant position can be placed in the market until the usual price and volume relationships return. When it does we will be more than happy to increase our positions. However, right now, we believe having a higher level of cash on hand is wiser than going all-in on this short trend following signal.
If Ben Bernanke and the Fed were not manipulating the market with ZIRP and QE we would be more than happy to operate on our usual pre-2009 mode. In this world, that becomes simply too risky. So, for now, we will take it slow and steady and only increase our position on further short signals, keeping a high level of cash.
The corporate earnings are getting weaker, there are some pretty weak forecast for the next four quarters, the macro situation isn’t really improving, and we have a manipulated market thanks to ZIRP and QE. The one thing we are for sure of at Big Wave Trading is that in time this is going to end very badly. Until then, enjoy the wild ride. Aloha and have a great week.
Top Current Holdings – Percent Gain – Date of Signal
AVD long – 117% – 1/10/12
NTE long – 112% – 8/17/12
CAMP long – 48% – 4/26/12
VRNM short – 47% – 4/10/12
CSU long – 37% – 9/4/12
MAGS short – 34% – 4/18/12
ASTM short – 27% – 7/17/12
