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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
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Big Wave Trading
  • Big Wave Trading Portfolio Update And Top Current Holdings 0 comments
    Nov 5, 2012 7:12 AM | about stocks: AVD, NTP, VRNM, CAMP, MAGS, CSU, VCEL

    The Big Wave Trading Portfolio remains under a SELL signal on the SP500, Nasdaq, Russell 2000, and DJIA. The NYSE switched to BUY signal yesterday and subsequently re-switched to a NEUTRAL signal by the close of today's trading.

    Two words can sum up this week of trading: random, ugly. Another word many traders were using this week was confusing. While we remained under the 50 day moving average on all important (I would not consider the NYSE "important" per se) indexes, the action on Thursday had the type of move that signals a short-term low has been hit. The previous three to five sessions in the big indexes prior to Thursday indicated a market that wanted to continue to bounce. However, today completely put a wrench in that assumption.

    The worst part of this whipsaw move the past two days is that our short ETF positions gave a partial cover signal and our exposure was reduced at the open on the gap only to see the market sell off all day confirming the original signal. It is what it is. Now what?

    Well, technically, nobody knows. Still, with this kind of action in the indexes, following the already in motion sell off, it can be said that based on history the market should continue to sell off. However, based on the history of the past four years, the market should establish a low around here on very little volume and then rally to new highs on even lower volume. That has been the pathetic, but real, pattern the past four years. It's outside of anything you can backtest on USA markets but it is what we have.

    Our current methodology has us in a very heavy cash position, with some current long positions still working, and a couple of hedged ETF shorts to counterbalance the longs. As these longs give final profit taking or cut loss exit signals, we will increasingly become more weighed to the short side via our ETF short positions. If we do find support here, our longs should continue to work and we will exit the ETF short positions.

    As for current trading opportunities we are finding very few. There are a couple of recent pumps that are in shortable positions but you can't place large amounts of capital in these cheap pumps. There are very little to zero stocks setting up in current strong technical patterns, with proper volume characteristics, that lead to high percentage breakouts. On top of that, there continues to be no trend following signals via our trend following methodology in individual stocks.

    We have noticed strength in a few world stock markets, particularly singling out the South East area. It will be interesting to see if the money continues to flow into these advancing nations and out of declining nations like the United States. Follow the money. The money never lies. Price is the only truth, in a world full of professional and well-payed liars.

    We wish everyone a great weekend. Maybe next week we can get a more trend-friendly market. The current chop of the small trends that we do get make it nearly impossible to make any significant gains as we must position size accordingly. Aloha everyone!

    Top Current Holdings - Percent Return - Date of Signal

    AVD long - 120% - 1/10/12
    NTE long - 59% - 8/17/12
    VRNM short - 51% - 4/10/12
    CAMP long - 48% - 4/26/12
    MAGS short - 29% - 4/18/12
    CSU long - 28% - 9/4/12
    ASTM short - 25% - 7/17/12

    Disclosure: I am long NTE, AVD, CAMP, CSU.

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