Stock market indexes closed out the week with another solid intraday session, rallying well off the lows closing near their intraday highs. The Nasdaq managed to close at its HOD adding further confirmation that the current uptrend is on solid footing. This is why our models remain under an across the board operational BUY signal following its switch from NEUTRAL on 10/28.
We love to see confirmation in the market and we continue to receive confirmation signals as this trend goes along. The Follow Through Day in early October in the overall market was followed by our switch to a BUY signal which was followed by further confirmation this past Monday when stocks followed through on the 10/28 move.
During this time, more and more leading stocks continue to enter my top scans breaking out to new highs and/or forming excellent consolidation patterns off their recent lows. These patterns are not perfect and this uptrend started a bit early off those volatile lows we saw from August-October. This is why we are holding more positions than we would like at this juncture.
Due to the V-shaped nature of this tape it continues to be difficult on our end to invest 20% of our capital in 5 stocks. We continue to believe it is wiser holding a basket of stocks outperforming the market, cutting the laggards and buying the leaders as we continue along in our uptrend. It works for us as we have cheap commissions and large accounts.
However, those with smaller accounts probably have had a difficult time getting fully invested in any low risk fashion. On that end, we definitely understand. The good news is that this market has come a long way pretty quickly which means it will have to digest the gains. As long as the pullbacks are shallow (3%-5%), we would continue to watch leading stocks that are forming consolidation patterns and set up buy stops accordingly.
We will be back to fully invested on our end, following the execution of our long positions on Monday morning (as long as they all get filled). We are currently holding zero hedges and continue to stress the importance of paying attention to low priced earnings and contract winners that trade heavy volume in the pre-market for intraday trading opportunities.
Daytrading continues to offer the highest returns for the risk available during the current earnings season. Watching for Buyable Gap ups (like STMP) in our Perfect Speculator names following earnings continues to be the other top play currently.
Alright everyone. Have a great weekend. It was a successful past week for us at Big Wave Trading and we expect that to continue as we continue along in this fourth quarter. Don’t forget that if you would like to take a trial we offer one right here! Once again, have a great weekend and we wish you the best during the upcoming week. Aloha from Maui where winter is coming.
TOP CURRENT HOLDINGS – PERCENT GAIN SINCE SIGNAL DATE – SIGNAL DATE
PAYC long – +157% – 10/30/14
CLLS long – +55% – 10/30/15
MEET long – +36% – 10/9/15
HCKT long – +33% – 6/18/15
MXL long – +32% – 10/9/15
FSB long – +26% – 10/23/15
