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Big Wave Trading Portfolio Update And Top Current Holdings


It was a very uncorrelated market the past week with the Nasdaq falling 1%, the DJIA rising 1%, and the Russell 2000 coming in flat. Overall, nothing has changed in our model and we remain under an overall NEUTRAL condition.

Despite being under a current NEUTRAL position, we definitely have a long bias currently in big-cap NYSE stocks. Low P/E stocks that pay a nice dividend that show some fundamental growth are beginning to outperform more speculative technology and small cap stocks. The biggest reason for the divergence is obviously AAPL which makes up about 9.5% of the Nasdaq. The near 9% decline this past week definitely was the anchor preventing the Nasdaq from rising.

However, if you only think that AAPL is the reason for the weakness in the Nasdaq then why did the Russell 2000 lag? It's because right now big-cap low P/E dividend producing stocks are in favor. Growth and technology is not.

While there was not a ton of market moving news in individual stocks outside of AAPL, there were more oddities this week in more ways than one: 1. The constant overbought and oversold nature of stocks continued this week with some stocks seemingly up every day like GMCR and FB and some stocks actually down everyday like ONTY. 2. Continuous breakout fakeouts in stocks like TDG SWHC ACHC NCR RBA QIHU LPH EDU TOL MHO keep happening. 3. Breakout fakeout re-breakouts in stocks like GEO show up every once in a while. 4. Insane one day price moves in stocks like GRPN which retake their 50 day moving average on strong volume and end up 22% higher on the day.

The bottom line is that the insanity continues and despite some pockets in low P/E dividend stocks there is not much that can be trusted or relied on when it comes to our markets. However, the USA is not the only market in the world. Thankfully, there are other nations out there that actually promote free markets and freedom. World ETFs like EWA EWS EWH EWA and ENZL continue to march to new highs. And in other South East Asia nations the same can be said from VNM, CAF, THD, EPHE, EWM and DXJ. Other ETFs hitting new highs include EWO EWN EWQ EWK EWL EWU. On top of that, India is on fire with INDY, EPI, SCIF, and PIN showing Relative Strength versus our market.

So as you can see, as long as you do not focus on the US markets, you can make money trend following world ETF shares. Especially South East Asia. Remember, the world is nothing but a flow chart of capital. If that is the case, India, China, Thailand, Malaysia, China, Hong Kong, Singapore, the Philippines, Australia, and New Zealand will continue to dominate over the next decade as money leaves the United States and moves on to the next round of major growth economies.

So while we may have an insane Congress with an insane Federal Reserve bailing out and taking care of insane banksters with QE and ZIRP, trend followers can pack their bags and take their money to South East Asia. This is a trend I believe we will continue to see well into the near-term and long-term future. You can't be $16,000,000,000,000 in debt on the book ($86,000,000,000,000 possibly in unfunded debts) and expect the growth of the 80s and 90s to E-V-E-R return. Especially in a world where big corporations gladly hire cheap overseas labor and grant themselves huge bonuses and paychecks at the expense of the workers wages and benefits. It's a different world. The manufacturing jobs that everyone keeps screaming that need to come back are N-E-V-E-R coming back. Ever.

While everyone is upset about the trendless messy market we have right now, remember, on the other side of the world the trend is clear. Over in our neck of the woods we remain under a NEUTRAL condition with a bullish bias to big cap dividend-yielding low P/E stocks and a bearish bias on the overall macro economy.

Aloha and have a wonderful weekend!

Top Current Holdings - Percent Return - Date of Signal

NTE long - 123% - 8/17/12
AVD long - 121% - 1/10/12
VRNM short - 58% - 4/10/12
CAMP long - 47% - 4/26/12
CSU long - 41% - 9/4/12
ASTM short - 33% - 7/17/12

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