Currently Big Wave Trading remains in an overall market neutral position. The current short-term stock market rally while providing hints that it could last longer is still under pressure via the below average volume on the rally. Due to the low volume on the rally the possibility of failing here is still high. Until volume returns above average on the Nasdaq, we will continue to hold a neutral overall stance to the stock market. A breakdown on heavy volume here would trigger a full sell signal. At the same time, a move higher on very large volume would trigger a full buy signal. Since the market is volatile and the trend is clearly mixed (from August 2nd to October 21st the Nasdaq is only down 1.2% despite major up and down volatile swings), cash remains the largest position in both Big Wave Trading accounts. The Big Wave Trading Retirement account is currently long 3 bull ETFs for a 15% weighing with the rest of the funds in cash. The Big Wave Trading Margin account is currently long two stocks making up 3% of the account (non-margin %) and short 12 stocks making up 23% of the account (non-margin %). 4 of the 12 shorts make up 20% of the account. The majority of the remaining shorts were introduced into the portfolio from July-August period and thus we have taken profits a couple of times on these. When volume returns to the overall market indexes, we will move the 75% and 85% remaining cash into whichever ETFs/stocks trigger buy/short signals. Cash remains the proper play while volume eludes the market.
current top holdings (all shorts) – % returns (non-margin) – date of long/short
ANR – 57% – June 2nd
BKD – 32% – July 26th
BAK – 34% – September 1st
GES – 24% – July 12th