The Big Wave Trading Portfolio continues to be under a BUY signal that was generated on August 3rd. The past week was another overall solid week with solid intraday price action outside of Friday. Another positive was the Nasdaq having two up sessions on volume well above average, continuing the trend from the previous week.
We continue to believe that this uptrend can last longer based on the overall public (AAII Survey bulls: 37.5%) still not showing that bullish fever and the NYSE short interest ratio sitting around 5-year highs at 21.03. As long as the trend is up, the public is not overly bullish, and the short interest ratio remains high, the trend should continue to be our friend.
We know what to look for if that changes but so far we have absolutely no signs of a change in trend coming. In fact the last distribution day on the Nasdaq was on August 21st (according to Telechart's data). That is one month without a distribution day. Clearly, for now, there is nothing to worry about. We will cross that bridge when we get there.
As for stocks, we continue to find a ton of attractive long positions and continue to see many others setting up. If this continues, it bodes well for the continuation of the rally. Despite some trading sessions the past week being quite boring, there were plenty of stocks that made exciting dynamic price moves higher. Seeing these stocks move like they are on quiet days is a clear sign of real accumulation.
The only bad news, so far, in this rally is that we have not had a single stock set up in a "perfect" setup. However, that isn't surprising as beautiful green filled chart patterns have been in decline since the 2008 crash. Trend following is definitely where it is at. Playing hot charts is not. I am sure one day that will change but as of right now it has not. We'll keep hunting. Have a lovely rest of your weekend and aloha.
Top Current Holdings - Percent Return - Date of Signal
AVD long - 141% - 1/10/12
SVNT long - 70% - 9/10/12
NTE long - 65% - 8/17/12
CLGX long - 58% - 6/19/12
SHF long - 36% - 8/1/12
CAMP long - 33% - 4/26/12
PRXI short - 32% - 3/30/12
MAGS short - 30% - 4/18/12
VRNM short - 30% - 4/10/12
STX long - 25% - 6/29/12
Additional disclosure: I am short VRNM MAGS PRXI