Joshua Hayes'  Instablog

Joshua Hayes
Send Message
Joshua "MauiTrader" Hayes is CEO, President and founder of Big Wave Trading Inc., a Maui, Hawaii-based stock market advisory service. Hayes is a well-respected stock trader who combines fundamentals, technicals, psychology and money management to trade professionally for his personal,... More
My company:
Big Wave Trading
My blog:
Big Wave Trading
  • Big Wave Trading Portfolio Update And Top Current Holdings 0 comments
    Oct 14, 2012 6:11 PM | about stocks: VCEL, CSU, MAGS, RBGPF, PRXI, VRNM, CLGX, SVNTQ, NTP, CAMP, AVD

    The Big Wave Trading Portfolio is currently under a NEUTRAL condition. The model switched from BUY to NEUTRAL on Tuesday due to the Nasdaq closing below the 50 day moving average on average volume.

    Our model expected this switch to occur after Apple (NASDAQ:AAPL) closed below the 50 day moving average on strong volume on Friday October 5th. On September 24th Apple began to sell off on above average volume and continued to do so for another four sessions before finally breaking down on October 5th.

    Another problem we started to also notice was the overall lagging of the Nasdaq's Relative Strength line compared to the SP-500′s Relative Strength line. While the Nasdaq was breaking out to new highs in September, its RS line was severely lagging no where near its previous March highs. In recent weeks we have seen the Nasdaq's RS line simply implode compared to the overall market.

    This RS lag is even more severe in the Russell 2000 full of vibrant young growth stocks. This RS lag is overall problematic for a variety of reasons. You normally want to see new exciting growth companies and revolutionary technology companies lead a market. Not stodgy old safe dividend producing large capitalization stocks. While a trend is a trend, the strength of a trend is directly correlated to what type of stocks are leading a market.

    Another problem we have witnessed during this switch to NEUTRAL is that we have not seen a rotation from the leading growth stocks that have come under some intense recent selling into new leading growth stocks. On top of that, we noticed that WFC and JPM are putting in low-volume breakout high-volume fakeout reversal moves. GS and BAC appear to want to do this too. As the rulers of the world go, so will go the stock market. If the Lords of Finance sell off, the market is going to sell off.

    So we have a market under heavy distribution, leading stocks like AAPL and PCLN possibly rolling over, banks (KBE KRE) putting in breakout fakeout moves, and an extremely low VIX on top of all of this. What does all this point to? A high probability that we will enter into a SELL signal at some point and will begin to rework the short side/long put side of the market.

    However! However. There is always the Fed and Ben Bernanke. They have already intervened during every single one of the last market pullbacks. What is to say this will not be any different? They have already screwed the poor and middle class over with their "zero-percent-CDs-forever-policy," allowing the folks that do not have time to invest in the markets no chance what-so-ever to get ahead. They have already bailed out failing corporations effectively killing free markets. They have continued to print worthless dollar bills at the push of a button for years now, effectively destroying its purchasing power thus causing massive inflation that hurts the folks that can't save money in the first place due to the low interest rates.

    So do we think that an actual prolonged downtrend will start thus allowing a new fresh crisp batch of leaders to rise from the ashes when the market is ready to move higher again? Nope. We sure don't. We can only hope that one day the Fed decides to let the market do what the market needs to do but we are not going to hold our breaths. The first area of support we are looking at is the 200 day moving averages on all leading market indexes.

    The bottom line, for right now, and I mean right now, is that we are NEUTRAL. We will take long and short signals as they arise. We are extremely picky here and if it is not perfect or near perfect for the reason we want to conduct the trade, we will not take the trade. On a final note, speaking of perfect, we did not have one technical/fundamental or even technical alone "perfect" chart setup during the entire uptrend from June to September. This was the first time since the 2009 uptrend which only produced CANSLIM quality long signals and zero "perfect" CANSLIM/"perfect" chart signals. To me that tells me all I need to know about the quality of the uptrend itself.

    Aloha everyone and have a wonderful and profitable week.

    Top Current Holdings - Percent Return- Date of Signal

    AVD long - 136% - 1/10/12
    CAMP long - 61% - 4/26/12
    NTE long - 57% - 8/17/12
    SVNT long - 53% - 9/10/12
    CLGX long - 53% - 6/19/12
    VRNM short - 39% - 4/10/12
    PRXI short - 37% - 3/30/12
    SHF long - 35% - 8/1/12
    MAGS short - 31% - 4/18/12
    CSU long - 30% - 9/4/12
    ASTM short - 25% - 7/17/12

Back To Joshua Hayes' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.