Mark Minervini setup

Mark Minervini Setup How to find stocks Screen stocks that are within 25% of their 52-week high Eliminate the following stocks Eliminate stocks trading below 30 200 MA is rising for at least 3 months 50 MA is above 200 MA Current price is above 200 SMA and preferably above 50 too Current price is at least above 100% from 52-week low The stock should have made a 52-week high at least once every 4 to 6 months Buying Pattern Make stock list every week after weekly closing Use weekly charts Use Volatility Contraction Pattern (VCP) Use only Price and Volume Stocks moving up with good volume and then falling with lower volume (consolidating) is good Use weekly charts AMO daily charts are good for seeing setting of the stock Look for volatility contraction in daily charts (just for looking entry) You don’t need to find new candidates every day, try to add to existing position Breakouts should happen between 4–8 weeks Win rate is only 50%, so be prepared Post Buying Monitoring Follow up buying Green days vs Red days Up Volume vs Down Volume Tennis Ball Action Shallow Pullback VCP Pattern Volatility Contraction Pattern (VCP) To calculate volatility contraction, divide swing low by swing high then -1 gives the % drop in volatility There should be ideally 3 VCP Each time volatility should decrease by ideally 50% (not a hard rule) Buy when the previous swing high is taken out With volatility, there is also time contraction which is very similar to price contraction Take a stock for 2 VCP only if the second contraction is more than 70% Stop Loss Calculation Plot 20-period ATR on daily chart Calculate 2× of the above value Use this value as your stop loss Use maximum of 10% as stop loss Here’s Mark Minervini coming into the ‘95 uptrend based on what stocks met his criteria. He didn’t get really aggressive until April ‘95 - had an incredible 413% return that year! From ‘Trade Like A Stock Market Wizard’ - Minervini 2013

by Kshitij