Joshua Hayes'  Instablog

Anticipation of the Fed tomorrow is tremendous as traders position themselves ahead of tomorrow's policy announcement. On the economic front today weaker than expected housing data failed to halt the rally in homebuilding stocks today. Homebuilding ETFs regained their 50 day moving average a show of strength. Buyers were out support stocks yet volume lagged behind Monday's pace suggesting buying fever wasn't too high. Tuesday's returned to positive side as the last two Tuesday trading sessions have ended in the red. Today's price action certainly has put the market in a more favorable light for the bulls. Of course, tomorrow can change this picture in a heartbeat. However, given the recent action there hasn't been any signals suggesting we have much downside from here.

Homebuilders have certainly made a come back and judging by the volume seen in the ITB ETF buyers were rushing to pile back in. Defense of the 50 day is a big positive for the ETF and stocks. Last week it certainly appeared as if homebuilding stocks were going to head below their respective 200 day moving averages.

Crude oil settled above $98 a barrel. Higher crude prices will certainly hurt the consumer despite all the good news regarding "shale oil" and "shale gas." Higher commodity prices in general will have a great impact on lower income families and continued rising crude oil prices will certainly keep the squeeze on. DBC - Powershares Commodity tracking fund is poised to push higher from its latest consolidation. Not only will stocks have fun tomorrow with the Fed announcement look for the commodity sector join in the fun we call volatility.

There will be a lot of talk from the financial press on how to manage ahead and after the Fed policy statement. Let price be your guide rather than your opinions. Ego gets in the way often and leads to issues trading your portfolio. Let it go and follow Big Wave Trading and our process guiding you through any type of market.

Enjoy watching the fireworks!

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

A positive sentiment report from the National Association of Home Builders (NAHB) helped propel stocks to the highs of the session. Prior to the NAHB report the Empire Manufacturing index jumped more than expected. However, a deeper look into the report showed some serious cracks. It wasn't until after 2pm where the trouble began to start. A headline from the Financial Times stating the Federal Reserve was set to announcing taper plans on Wednesday sent the market into a tailspin. Nearly wiping out the day's gains the market was able to close just under the mid-point of the session. Volume was higher than on Friday assisted by the intraday volatility. We remain stuck in neutral as this market is desperately looking to find a new trend.

Tomorrow we'll get a boat load of economic data, but all eyes will be waiting on the release of the FOMC policy statement. To taper or not will be the hot topic across the blogosphere and financial media. No one knows other than the Fed Chairman and the rest of the voting board members. If the FOMC does taper is it guaranteed the market will go lower? While it may seem logical for the market to go lower is it a given? We'll get a trend sooner or later, but no one can guarantee where the market will head next.

There are a few stocks looking decent here regardless of the increased market volatility. Learn to embrace volatility rather than fear it. Volatility is our friend and we'll use it to our advantage. Many will fear market volatility as we embrace it. Learn with Big Wave Trading how to embrace volatility.

We are certainly looking forward to the fireworks the market will provide this week. We'll be ready to take on the challenge we call the market. A strong process relying on piling onto winners and cutting losers produces fantastic results. Have a great week!

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

The Big Wave Trading Portfolio remains under a NEUTRAL condition, following a week of choppy price action. The overall market continued its choppy trading the previous week with neither the bulls or bears asserting any real directional power. The bottom line is that we remain trapped between the recent highs and lows of all the major market indexes during the past month. Our model will not move to either a BUY or SELL mode until this trading range is broken.

The other possible model change could occur if the indexes make a powerful one day price move on higher volume. If that occurs and the indexes still remain range bound it is possible, if there are leading stocks in confirmation of the move, that we could switch before the trading range is resolved.

If we were forced to make a bet on which way the market is going to break next, we would laugh in the face of someone suggesting such a preposterous notion. However, if we were asked to analyze the current situation of leading and other individual stocks in relationship to the pullback in the overall indexes, that would be a welcome logical request.

When it comes to leading stocks in the market, based on EPS and RS ratings, everything is crawling along well. Our current holdings and leading stocks have done remotely well during the pullback in the market, with many of these stocks forming constructive consolidation patterns that historically should lead to further price breakouts. Some of our favorite examples include SCTY, TSLA, TNGO, DPZ, INVN, BLMN, SWHC, LNKD, and many others. These stocks are either consolidating nicely or are trending higher, despite the weak market. This, in our analysis, is a positive sign for a possible resolution higher.

This being said, nothing is concrete and for all we know the market might break out to new highs to just reverse lower on huge volume. The point is that anything can happen in the stock market and if you are not ready for anything and everything, then at some point you will be caught off guard and pay the price.

We shall see what the upcoming week has in store for all of us traders. As it stands, we continue to be very neutral here ready for anything to happen. Once again, based on our current holdings and leading stocks, we should expect a resolution higher. In reality, however, remember, anything can happen and everything must be prepared for.

Have a wonderful rest of your weekend. Aloha from a very beautiful, warm, and sunny west side of Maui. Aloha!!

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

RVLT long - 162% - 3/26/13
EAC long - 156% - 12/17/12
CAMP long - 136% - 4/26/12
POWR long - 135% - 12/11/12
CSU long - 106% - 9/4/12
FLT long - 97% - 9/6/12
HEES long - 86% - 9/4/12
ASTM short - 73% - 7/17/12
INSM long - 68% - 4/19/13
WAGE long - 63% - 1/8/13
ADUS long - 59% - 4/22/13
CHUY long - 55% - 1/10/13
SBGI long - 50% - 3/22/13
WDC long - 45% - 1/9/13
V long - 41% - 8/31/12
GMCR long - 39% - 4/23/13
BBSI long - 38% - 2/13/13
TECUA long - 36% - 2/5/13
GLL long - 27% - 2/14/13
PFBI long - 26% - 11/19/12

DDD long - 25% - 4/30/13

Disclosure: I am long RVLT, EAC, CAMP, POWR, CSU, FLT, HEES, INSM, WAGE, ADUS, CHUY, SBGI, WDC, V, GMCR, BBSI, TECUA, GLL, PFBI, DDD.