The Big Wave Trading models are under a bit of a mixed bag as we have some indexes looking neutral-strong like the Russell 2000, Nasdaq, and Nasdaq 100. Some indexes looking neutral-weak like the DJIA, SPX, and NYSE. And some indexes looking outright ugly like the DJ Transportation Average. This is why we remain under a NEUTRAL operational mode on all indexes except the DJT which switched to a SELL signal following Thursday’s sell off on above average volume below its 200 day moving average.
This past week we had an event that is always a huge tell that something big is about to occur. It does not guarantee that something big will happen. However, whenever we get more than a handful of signals in one day (a very outlier event), like we did on Wednesday, it either means we are ready to blast off or that we are about to get a major whipsaw signal which is obviously quite bearish. So far, following those long signals, it is a pretty mixed bag going into the close on Thursday. However, following the route in the futures market post-jobs on Friday, they all could easily fail.
The good news is that every single long signal we took was very low risk. Every signal offered a risk of 3% or less if our stops got hit. However, if all these stocks fail that, to me, will be confirmation to the weakness in the Biotech index and the DJ Transportation index is forecasting rough times are on the horizon in this very late bull market. I continue to “hope” that we will go full-on parabolic in the leading stocks we are still long listed below but I do not get what I normally want in the market so I don’t expect this to really happen.
For now, the verdict is still out on the direction this market, as a whole, wants to trend towards. Since we are still in an overall long-term uptrend we will continue to take signals as they are generated and cut our losses quickly when wrong. If the market weakens here and our models switch to a SELL signal, we will begin passing on any new long signal if it does not pass all of our fundamental and technical criteria. We will become very restrictive if the market starts breaking below the March lows in many of these indexes.
We recommend being very selective and careful here. The market is starting to flash some serious warning signs but we have enough current holdings looking solid overall that we have nothing to really worry about yet. However, in this tape of no liquidity, that can change rapidly. Having tight stops on the books at all times in every position remains an absolute must. If the market starts to get ugly here, our stops will be hit and we will lock in our gains and take our tiny losses. If the market finds support here, we will continue to just let our process work itself out and let the stocks tell us when we should exit instead of using our opinions to sell.
Have a great rest of your Easter weekend. Thank you for reading. Aloha from a very hot west side of Maui.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL – SIGNAL DATE
VIPS long – +713% – 7/17/13
AGIO long – +87% – 9/24/14
PAYC long – +78% – 10/30/14
SWKS long – +68% – 10/29/14
CBPO long – +67% – 10/24/14
ANAC long – +65% – 1/20/15
AFAM long – +57% – 1/8/15
CVTI long – +55% – 11/3/14
RUBI long – +51% – 10/29/14
VDSI long – +50% – 8/4/14
ESPR long – +48% – 3/9/15
AVGO long – +48% – 10/28/14
VRX long – +45% – 11/17/14
EA long – +39% – 11/10/14
SERV long – +33% – 11/7/14
RCPT long – +32% – 2/20/15
CNC long – +31% – 1/8/15
PANW long – +30% – 11/10/14
TERP long – +28% – 1/16/15
LCI long – +26% – 2/5/15
