Joshua Hayes'  Instablog

Void of economic releases the market did get showered with more than $3 billion in asset purchases from the Federal Reserve. A hiccup in the morning was quickly support as the Federal Reserve Open Market Operations flooded the market with fresh new cash. Over Europe the DAX closed in the green for the 11th straight day. The index has been up 18 out of 20 days since the April lows. We have witnessed an impressive run for the DAX and on the heels of the Nikkei continuing to push higher into the stock market stratosphere. Non-stop QE and ZIRP have juiced gains, but who are we to judge other than to ride the wave higher. We'll get a few economic reports out tomorrow, but the market will certainly react to Bernanke and the release of the minutes from the last FOMC meeting. The trend is your friend.

There really isn't much to opine regarding this market. Other than the non-stop upward mobility prices have found themselves in. Sure we can dive into why stocks are trading at a premium to EBITDA, but would that make a difference? At some point we'll see a correction of some order of magnitude. However, no one knows where or when it will come. For those like Peter Schiff who were in 2006 claiming we were going to collapse completely missed the upside from 06-07 even a good rally in the spring of 2008. If you follow a sound process following price and ignore the noise you'll be able to capture any market trend in the future.

(click to enlarge)

from ZeroHedge

It is interesting to see the amount of stocks in the market that are above their moving averages. It has been a while since we have covered this metric, but given the lofty levels we are experiencing I say why not. Nearly 80% of all stocks being traded in the United States (according to Barchart) are trading above their respective 150 and 200 day moving average. 76% of stocks are trading above there 20, 50, and 100 day moving averages. These are certainly "lofty" levels, but we have seen these levels before. Any outcome is possible and having a sound repeatable process is what will set you apart from the pack in terms of solid gains.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Heading into the week the US market once again watched the Nikkei continue to move further into the stratosphere. Futures were pretty anemic heading into the trading session today. Overnight news focused on the plunge in precious metals as Silver and Gold were hit hard. Despite the negative open and sentiment both precious metals were able to find their footing and reverse to close positive. Each metal tested key points and perhaps have put in a short-term bottom. SPX briefly hit all time highs, but then were knocked off their highs of the session. Support did filter into the market helping the market to close off the lows of the session. All signs point for this market to continue higher and with Turnaround Tuesday tomorrow gains should resume.

The interesting action today centered around the precious metals and one that could turn out to be a significant turning point in the struggling precious metals. GLD tested April lows today and with a bunch of volume showed tremendous amount of support. On the other hand SLV had dropped below its pivotal point only to plow through it today. Volume certainly is saying something for both precious metals. Was today a bottom for GLD and SLV? Is anyone's guess, but we do have a clear exit in case this falls apart on us.

Wednesday we'll get a read on Existing Home Sales and the Federal Reserve meeting minutes. The focus on the language in these minutes over the "taper" of "halting" of the current money printing scheme will be nauseating. CNBC et al will have a field day with LIESman leading the charge. Price will lead the way for us. Focusing on our stocks and how they act is much more important than anything anyone can "guess" about the Federal Reserve meeting minutes. Stick with Big Wave Trading.

Enjoy this week!

Disclosure: I am long GLL.

The Big Wave Trading Portfolio remains under a BUY signal and currently has zero issues weighing on it presently. On the short-term the market is very extended in price compared to trailing key moving averages. Logic dictates that a natural pullback to some form of support levels (fibonacci, price lows, or a moving average) should occur on the short-term. However, when dealing with our current reality we know that we could easily melt-up further in this QE environment before a logical pullback does occur.

With the current uptrend the way it is-where volume is not part of the equation in our analysis-price will continue to be our sole signal generator. During the past week, we did see the Nasdaq suffer what appears to be on the surface a second churning session. However, following this churning session, the Nasdaq subsequently went to new highs. Therefore, for now it is only a surface scratch. For those sessions to have any weighing in the overall model we will have to see further distribution days that then lead price below these two sessions. Until that occurs, we will continue to stay the course.

There were no major developments this week in our personal stock holdings, other than the fact that we have not generated any new long signals the past three market sessions. We believe this might possibly indicate that the market is too extended on the short-term. In saying this, it would not shock us if we got new long signals on Monday. Our current holdings continue to look very solid and we see plenty of stocks setting up in very strong consolidation patterns (ie…INVN) that could easily be another launching pad for another leg higher in this overall market.

The surf continues to be absolutely huge in my backyard home break and I am going to go out and enjoy myself until I get beat up too much or get stung one too many times by all of the man-of-wars that are out there. I look like I have been hit by lightning at this point. Have a great profitable upcoming week. Aloha.

Top Current Holdings - Percent Gain Since Signal - Date of Signal

EAC long - 243% - 12/17/12
HIMX long - 216% - 12/19/12
RVLT long - 134% - 3/26/13
CAMP long - 118% - 4/26/12
CSU long - 114% - 9/4/12
POWR long - 109% - 12/11/12
HEES long - 86% - 9/4/12
FLT long - 84% - 9/6/12
WAGE long - 75% - 1/8/13
GNMK long - 74% - 11/16/12
ASTM short - 71% - 7/17/12
SBGI long - 47% - 3/22/13
BBSI long - 47% - 2/13/13
INSM long - 45% - 4/19/13
V long - 43% - 8/31/12

GMCR long - 41% - 4/23/13

Disclosure: I am long EAC, GMCR, RVLT, BBSI, INSM, V, HEES, CAMP, WAGE, FLT, CSU, SBGI, POWR, GNMK, HIMX.