Trading U.K stock market using Mark Minervini strategy

Friday, Dec 14 2018 by
53

Mark has been interviewed by Stocko a couple of times and from some of the comments on various threads there appears to be a few of us using his methods to trade the U.K stock market. I thought it would be useful to have a dedicated thread where we can discuss how well its working.

Personally I have been in cash at least 50% since the end of May and at 95-100% since early October. Getting out of stocks as they roll over has protected me from any real damage.

I'm struggling to find many setups I want to buy so I am developing my "sit out power"

How is everyone else doing?


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649 Posts on this Thread show/hide all

HumourMe 8th Jul 630 of 649
1

In reply to post #490841

Solid State (LON:SOLI) - again forgive me noobness, but did this just breakout today on huge volume?

Not quite. It reached its previous high and it looks like a lot of people took the opportunity to exit.

5d23a715a6634solid.jpg

I think a breakout would need a convincing close above the previous high.

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HumourMe 10th Jul 631 of 649
2

In reply to post #489576

Just as a quick follow up to this comment:

I then tried adding to the screen the additional criteria of Spread < 100 bps and Risk Rating = Conservative, and that gave me about 14 candidate stocks, all of which look to me like stocks I might seriously consider for my portfolio.

For my holiday (re-)reading, I've been slowly going through Minervinis books again. I've picked up several things that I'd previously missed. One quote from Think & Trade Like a Champion, p47 concerned volatility...

If a stock is highly volatile, with dramatic gyrations up and down, it's going to be a difficult issue to trade using a relatively tight stop loss to control risk. ....
A risk-first approach would tell you to find another candidate.

So your thinking is in perfect alignment with Minervini :-)


On p39 of 'Champion' under the summary of 'violations soon after a breakout' the 4th bullet reads:

More bad closes than good closes.

I may have missed it, however, I don't think that these are defined, except with reference to two charts. I've interpreted these as determined by proximity of close to high/low. Does anyone have a formal definition or can anyone point me to the Minervini one?


Another thing I picked up (which may be important if we see a bear market) is the need for patience. So while waiting for the perfect set up I thought that I would throw in an additional question for anyone:

Does the trend template definition change materially between the two books?


Finally, I thought that I would take this opportunity to comment on the relationship between the two books. They are complementary and due to repetition of key parts; also standalone in that reading 'Wizard' is not required to understand 'Champion'.  If you got value from one of them I would recommend the other. Choosing just one though, would be a difficult recommendation as it depends on where you currently are on the journey. If pushed though I would recommend them in the order published, i.e. Wizard first. 

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HumourMe 10th Jul 632 of 649

In reply to post #490226

Having written all that it sounds like I know what I'm talking about :-) - but actually I'm still learning all of this. It is one thing to know the theory and another to successfully put it into practise. These are my thoughts, others may have a different view, especially on the interpretation bits.

100% agree with this sentiment. I don't think the learning ever stops. I'm not even sure that, apart from risk management, what I think I know about technicals is relevant. Balanced against that I similarly doubt my 'knowledge' of fundamentals.

The 30week MA was promoted by Stan Weinstein and Bill O'Neal, both of which MM used as inspiration for his style. 30 weeks are roughly 150 trading days, so very similar to a 150day MA (but as it's a weekly chart you have to make the translation to weeks).

Stan Weinsteins was possibly a Mansfield 30 week weighted moving average link. This approximates to a 21 week exponential moving average. I've no idea how to equate this interpretation to days. However, the broader point stands, in that for trend following, make sure that the longer term trend is up, determined by some measure.

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unwise2 12th Jul 633 of 649
5

The U.K continues to be a "hard penny" environment. Over the past 3 months my win loss ratio has been 33.3%/66.6%.  My gains have been bigger than my losses and my position sizing has been small so I am effectively at breakeven.

Avast (LON:AVST) has broken out of a 2 month base after setting up a handle, it has also created a 9 month ascending base. It's not an ideal situation because volume didn't contract very much in the handle (volume was half 50d average the day it made it's low in the handle).

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herbie47 12th Jul 634 of 649

In reply to post #492236

I agree about the UK market this year, although I have missed quite a few, I'm finding the US market easier with more opportunities.

I have looked at Avast (LON:AVST) before, debt is still too high for me.

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llwydiaid 12th Jul 635 of 649
1

Avast (LON:AVST) I've been stopped out a couple of times in the past year so I'm staying on the sidelines. Not the easiest of charts to read.

5d28430a3b938AVST.png


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unwise2 12th Jul 636 of 649

In reply to post #492271

Agree Avast (LON:AVST) is a bit tricky, I bought some yesterday and I am using staggered stops.

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herbie47 12th Jul 637 of 649

Any views on IG Design (LON:IGR) that I think a few of us bought a while ago, I see it is now below the 50MA, it's down about 6%, is it worth holding or not?

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unwise2 12th Jul 638 of 649

In reply to post #492296

Tough to call on IG Design (LON:IGR), it appears to have bounced off support around 574p, its 2019 EPS growth was good but it appears to be stuck in a trading range after very briefly breaking out.

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nicobos 12th Jul 639 of 649

In reply to post #492271

Avast (LON:AVST) popped up on my watch-list as well. Just so many fake-outs and been quite volatile so I don't feel comfortable with this breakout.

Would feel better buying it on 30 MA week support line as it is in a nice stage 2 !

It's been slim pickings in the UK market for MM breakouts...macro uncertainty after the summer also means it's likely to be a challenging momentum market for a bit longer.

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llwydiaid 12th Jul 640 of 649

I agree about the "slim pickings" and "hard penny" comments about the UK smaller companies market. I've had more success with international investment trusts e.g. Montanaro European Smaller Companies Trust (LON:MTE) which shot out of a lovely cup and handle accompanied by a closing of the NAV discount.

5d286b4301819MTE.png


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unwise2 12th Jul 641 of 649

In reply to post #492331

Just so many fake-outs and been quite volatile so I don't feel comfortable with this breakout.

I've been stopped out a couple of times in the past year

To my eyes Avast (LON:AVST) has only formed one handle (end of Feb) that has failed in the past 12 months, the break out in May never formed a proper handle and failed immediately.

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Edward John Canham 12th Jul 642 of 649

In reply to post #492366

Avast (LON:AVST)

I think this is simply moving up as and when positive news comes out. The market is still cautious given it's short quoted track record.

I bought some on the trading update in April, and to date I can't complain.

Phil

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Glorenfeld Thu 1:27pm 643 of 649

One I've mentioned before, but Trans-Siberian Gold (LON:TSG) is possibly setting up a Power Play/High Tight Flag.

Up 100% since Feb, or again since mid April. Flag starting at Jul 12th. No evidence yet that the pattern will complete, but if it gets back to the 85-87 range in short order, then I'd say it's looking pretty good.

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andrea34l Thu 2:20pm 644 of 649

In reply to post #494076

Sorry to be such an ignoramus, but what does "a Power Play/High Tight Flag" mean? I hope it's positive, as I've just bought them :-/

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cidunn Fri 8:36am 645 of 649
2

In reply to post #494101

Hi Andrea,

I came across this thread
https://www.stockopedia.com/content/minervini-power-play-242073/

"Essentially they are pure momentum plays with little regard to fundamentals.

To qualify the following criteria must be met:

1. Stock price up 100% in less than 8 weeks, usually after a period of dormancy.
2. Stock usually moves sideways 3-6 weeks with corrections of max 20-25%
3. Days before the breakout volume will contract considerably."

All the best, CID

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Glorenfeld Fri 10:07am 646 of 649
1

In reply to post #494341

Which just shows that you should refresh your memory from time-to-time, as I had extended the initial doubling period in my head! Now not sure that Trans-Siberian Gold (LON:TSG) qualifies, as the doubling took longer than the 8-weeks allowed.

I would also say that in the case of Trans-Siberian Gold (LON:TSG) , I think the fundamentals also look good (assuming gold doesn't tank).

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unwise2 Fri 11:10am 647 of 649
2

In reply to post #494426

Now not sure that Trans-Siberian Gold (LON:TSG) qualifies, as the doubling took longer than the 8-weeks allowed.

Mark frequently says trading is an art not a science. The rules* he has written in his books are slightly fuzzy. If a stock moved up 95% in eight weeks or 100% in ten weeks that doesn't completely rule them out, it's up to the individual trader to decide how far they are willing to stretch the rules.  The most successful power play I have traded so far took 13 weeks to double.

I don't really have an opinion on Trans-Siberian Gold (LON:TSG) as a power play, it's success is tied to what happens to the gold price.

* except maximum 10% loss and buying under the 200dma.


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llwydiaid Mon 3:52pm 648 of 649

Blackrock World Mining Trust (LON:BRWM) another investment trust coming out of a cup and handle with room for the NAV discount to close.

5d35cd762e0b0BRWM.png


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mikelevie Mon 6:01pm 0 of 649

Agree with the observations of the UK being a hard penny environment at the moment.  That said, ABDP currently forming a nice VCP pattern.

Interesting that Minervini appears to be getting more optimistic about buying opportunities in the US after a long fallow period. His preference is for small caps (Russell index) to show more strength though.  A rate cut over there this week may give  them a shot in the arm. 

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