Seeking Alpha

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
    Nov 19, 2012 1:23 AM | about stocks: AAPL, IBB, XHB, ITB, FB, AVD, NTP, VRNM, CAMP, ASTM, CSU

    The Big Wave Trading Portfolio remains under a SELL signal on all indexes. However, we do take note of the positive price action and strong volume (even though it was options expiration related) on the indexes and more importantly on the oversold beloved-stock named Apple (NASDAQ:AAPL). Volume on AAPL was the highest since March and comes on an excellent intraday reversal. We call that positive price action.

    However, there is no way, based on Friday alone, to know if this is the end of the downtrend or just an oversold bounce. Some of the positives going for the market is the fact it is very oversold on the short term, the crowd is increasingly becoming more bearish, and AAPL's price and volume move on Friday. Some of the negatives are that there is still no obvious rotation from old leading stocks into new leading stocks, most recent strong sectors (IBB XHB ITB) are starting to crack on heavy volume, and despite sentiment growing more bearish there was absolutely zero fear in the most recent pullback. Everyone truly believes Ben will save us from every big bad market decline.

    The only way we see it at Big Wave Trading is that you must keep an open mind to everything and anything in this new QE-fed world. There is only one two ways to trade this market: trend following signals and value investing. The old momentum methodologies that made position traders like me wealthy during our early career have been missing since the 2008/2009 stock market bottom. This is a direct correlation of a QE/ZIRP policy. So, even though it seems the market is not done selling off, you must keep an open mind in the regards that Ben will indeed come to the markets rescue any time it even attempts to move lower.

    We have taken notice of some stocks that made very strong moves on Friday. However, we will need to see further positive price action next week or the week after to know if it is more than a one day options expiration wonder. The social networking site FB sure has been putting in some impressive price and volume action lately. That stock is definitely a stock that should be on all trend following wizards radar. It is too much of a cult stock and has so much volume that it is mandatory active and inactive traders watch this stock for trend following signals.

    Overall, we remain extremely heavy cash at Big Wave Trading due to the inability to trust price and volume action in the current choppy tape. Without any spike in the VIX, it is hard to believe a real bottom is here and while we are short some index ETFs we will be ready to reverse those positions ASAP if we continue to see further price appreciation. At the same time we do know another 2010 and 2011 pullback is more than likely to happen sooner or later and we will be ready to act accordingly when the time does come calling. And come calling it will one day. You can not keep an artificial economy up forever. Can you? Maybe you can. It's a much different world than it was before QE. Get used to it. I doubt it changes any time soon. I doubt it changes any time not too soon (4 years at least).

    On that chipper note, have a great weekend everyone. Surf is up on the north shore and the sun is shining. Aloha!!

    Top Current Holdings - Percent Gain - Date of Signal

    AVD long - 112% - 1/10/12
    NTE long - 102% - 8/17/12
    VRNM short - 58% - 4/10/12
    CAMP long - 47% - 4/26/12
    ASTM short - 37% - 7/17/12
    CSU long - 33% - 9/4/12

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

    Themes: QE, ZIRP, Ben Bernanke Stocks: AAPL, IBB, XHB, ITB, FB, AVD, NTP, VRNM, CAMP, ASTM, CSU
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

Posts by Themes
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.