The Big Wave Trading Portfolio remains under an overall SELL signal, despite the DJIA and SP500 being inches away from all-time highs. While the DJIA and SP500 continue to offer up actionable long signals in the big-cap slow-growth names on an occasional basis, small-cap growth stocks continue to display poor technical price action overall. To go along with the bifurcation in the market, volume has been completely absent during rallies indicating zero willingness to accumulate stocks from institutional investors.
While the market is still trending higher for the big-caps, there does appear to be some weakness starting to appear in some of the defensive industries I have been tracking lately. The Utility stocks got hit pretty hard on Friday and if the Oil and REIT sectors go, there is not really another area attracting any serious accumulation. So this situation will have to be monitored. But as of now the Oil stocks continue to do very well in the short-term so this continues to be our main focus on the long side in this current tape. Outside of that, there is not much that is interesting besides a few earnings winners.
There have been some pretty decent earnings winners lately and they continue to consolidate giving hope to the bulls that there is a chance the market might resolve itself higher. Unfortunately for the bulls, seasonality is against them as we head into what is historically one of the worst months and seasons for stocks overall. SWSK, SMCI, XOOM, CARB, WYNN, VDSI, and WPRT are the stocks that we have either played or are watching for breakouts to new highs. We do have some buy stops set on some of these names but if the tape does resolve itself lower on heavier volume these buy stops will be removed.
Overall, the market is going into a seasonally weak period of time where stocks do not perform well. Therefore, playing the market is very risky now and we do recommend that with the current tape trading in the manner that it is trading that cash is absolutely king right now for new investors. In fact, all investors, unless you are seriously good at your craft, should be positioned heavily in cash if you are an intermediate term trend follower. The tape is not setup correctly on a technical and on a seasonal basis for a large price run. If we had technology and growth stocks nearing new highs with the big-caps just following along, we could say otherwise. As it is, defensive measures must be priority.
Alright everyone. Let’s see what the month of May has in store for us. Have a wonderful rest of your weekend, thank you, and aloha!!
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – DATE OF SIGNAL
VIPS long – 319% – 7/17/13
HEES long – 213% – 9/4/12
AER long – 153% – 6/27/13
WDC long – 91% – 1/9/13
USCR long – 73% – 4/12/13
TPL long – 59% – 10/22/13
