Big Wave Trading Weekend Synopsis

The bifurcation in the current overall market is simply something I am not willing to casually overlook right now. The last time I saw something this extreme was back in 1999/2000 and that did not turn out well. So until I start witnessing the overall market moving in lock-step once again, I am going to back off on my long side operations on an EOD basis. There simply have been one too many failures lately and long-term winning positions are starting to trigger stops. Huge red flags, for now.

With the market acting the way it is and with the Italy vote coming on Sunday it is no surprise to me that I do not have any new positions for Monday. Even if I decided to loosen up my now tight criteria, there still would have been zero passing quality companies producing quality signals. The only signals I keep receiving in the short-term are oversold bounce signals in speculative quality names and only a few of these signals are coming from truly oversold (RSI (14) below 30) conditions.

Clearly, following the extreme moves in the DJIA and the RUT, along with the non-confirmation move in the Nasdaq and Nasdaq 100, now is not the time to be looking to swing for the fences on the long side. If you want to swing for the fences on a low float contract winner/earnings winner breaking above multi-month highs on huge pre-market volume on an intraday basis, I can bless that. However, if you cannot follow the market all day long or simply do not like day trading, then now is the time to exercise patience while we wait for high quality high reward/low risk setups to materialize.

As I mention in this weekend’s video lesson. I did a broad cursory review of my past big winners from the years when uptrends were steady and it is clear from just looking at these charts from 1998-2008 that not only do we not see anything close to these kind of setups nowadays but we haven’t really seen them at all since 2008. Not only do the setups not look nearly as strong but the uptrends are now much more volatile than they used to be. It was simply good to see that I am not crazy and in fact stocks trade horribly on an EOD basis compared to years past. Trend followers haven’t lost it. The market has.

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