The Big Wave Trading models remain under an across the board SELL signal and have been operating under this signal since 8/20 after being under a mix of SELL and NEUTRAL signals since 6/29. While our models remain under an operational SELL signal, the market has experienced a large bounce off the 8/24 lows. Our models will not switch back to NEUTRAL at least until the indexes can reclaim their downtrending 50 day moving averages. That will be step 1, barring any huge reversal on huge volume where the indexes close at or near their HOD.
The bounce off the 8/24 lows has produced some actionable signals in CANSLIM and Perfect Speculator quality names. We have taken these signals but are using only test buys as the market’s trend is very sloppy and choppy as we are stuck in between the 8/24 lows and the key resistance at the July/August lows and the downtrending 50 and 200 day moving averages in the indexes.
We take these long signals, despite the overall market because we have seen leading stocks break out before a market uptrend many times in the past and we know it will happen again in the future. If the market does continue to pullback following the resistance it has run into on Thursday, our sell stops will hit and we will take extremely tiny losses on the positions and/or will leave flat on the names we already have gains on. If the market rallies, we will not have any regrets on passing on the signals in the high quality names and will instead have capital gains.
Overall, we recommend keeping a neutral bias to the potential outcome of this market trend as long as we stay stuck in between the recent support and resistance levels. Eventually, price will break out of the price range and lead to a trend change. Until then, cash is definitely king and it is our current largest holding. We have some long positions and we have some short index positions but cash is definitely where we recommend most investors and especially new traders be at this current juncture in the market. Especially with it still being September. The odds are greatly in favor of the bears, until mid-October. We don’t recommend fighting seasonality.
We wish you the best during the upcoming week. Cash is still king.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – SIGNAL DATE
ANAC long – 309% – 1/20/15
SKX long – 133% – 1/26/15
PAYC long – 117% – 10/30/14
TREE long – 88% – 6/2/15
DXCM long – 83% – 12/3/14
ADPT long – 78% – 5/18/15
TVIX long – 53% – 8/20/15
ABMD long – 53% – 7/10/15
FIX long – 49% – 3/11/15
AMSG long – 41% – 2/26/15
SERV long – 38% – 11/7/14
AVOL long – 38% – 4/21/15
COKE long – 33% – 6/16/15
LHCG long – 29% – 6/11/15
EDAP long – 28% – 9/9/15
