Trading U.K stock market using Mark Minervini strategy

Friday, Dec 14 2018 by
61

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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As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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798 Posts on this Thread show/hide all

unwise2 5th Sep 779 of 798

In reply to post #510631

They both meet the initial criteria of the trend template (stage 2) but they didn't create a pivot point that you could buy and set a technical stop of 10% or less.

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Smiley 5th Sep 780 of 798

In reply to post #510641

I guess I’d better reread that chapter! Thanks. 

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unwise2 Wed 9:49am 781 of 798
2

Mark made an interesting comment this week in his webinar. The U.S investing championship is back this year, there are approx 120 people in the stock competion, only 10 of them have any gains. I would have expected more just through random chance.

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andrea34l Wed 9:57am 782 of 798

In reply to post #511981

That makes me feel better :-)

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nicobos Wed 11:48am 783 of 798
5

JD Sports Fashion (LON:JD.) broke out strongly yesterday out of a 6 month flat-ish base. It's shown good relative strength albeit in a tough sector. Missed the buy but will wait to see if it tests support.

Talking of retailers, Pets at Home (LON:PETS) continues to perform well since picking up earlier this year although took profits on half earlier so only small position.

Took proft on Greggs (LON:GRG) after the trend broke (keeping tighter stops given current market conditions). Another great runner. Likewise with Luceco (LON:LUCE) and UP Global Sourcing Holdings (LON:UPGS) when they got sloppy .

Sold out of £3IN as well - looked like a double top forming although breaking out today.

Learning Technologies (LON:LTG) forming a nice 1 year bowl and trending upwards well since results. Watching closely.

Was watching Network International Holdings (LON:NETW) but equity raise has killed the chart for now.

Tough markets generally with slim pickings. Not going big until Brexit stuff shows some sign of a resolution.

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unwise2 Wed 12:38pm 784 of 798
1

In reply to post #512081

I've been watching JD Sports Fashion (LON:JD.) for sometime, it didn't form a handle or cheat sub 10% so I didn't buy when it broke above 652.

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jwebster Fri 11:03am 785 of 798
2

Not an MM trader, newbie here, but curious as I recently read his students are doing well in the US trading competition this year.

Read both of his books just now and read through his recent Tweets. I picked up on four US stocks he mentioned recently on Twitter as £LSCC £TWTR £LGIG £EDU then reviewed these stocks on four dimensions, related to what I picked up from his books:

1. The chart – what is the price saying
2. Volatility Contraction
3. MA 50 100 200 trends
4. Revenue and EPS growth

Appreciate his books talk about a lot more than this of course

Looking at these four stocks I noticed:

1. All four have very clear uptrends in price, not much in the way of swings, fairly steady upwards movement
2. The volatility contraction was there in LSCC and EDU back in June-July but to my untrained eye I didn’t see much for TWTR and LGIH
3. The MA’s are all steadily going up, all in the right order, no exceptions
4. Revenue and EPS growth, on an annual basis was all up, however on a quarterly basis not so much. Actually, LSCC is a turn around. Recent two quarters bit flat but may reflect the greater market which is choppy now.

While a sample of four is small, my observations are price movement, MA trends and annualised revenue and EPS growth are all ‘must haves’ while Volatility Contraction is perhaps more of an art than a science and recent quarterly EPS growth is prone to overall market effects, so needs a balanced macro view.

Appreciate the views of others!

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unwise2 Fri 11:39am 786 of 798
2

In reply to post #512836

5d7b719dcc4eaChart-twitter-inc-1382019.p

The VCP for Twitter can be seen best on a weekly chart, final pullback was less than 9%. The first pullback was deep at 45% but the base is long at approx 15 months.

LGIH isn't as easy to spot, if you look at the price action between 6th-16th of August the daily range shrank to less than 2%. The ideal buy point was 19/08/19 as it broke above $76.50-$77.54.

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MartDK Fri 4:38pm 787 of 798

What tools on Stocko do you use to analyse volume? If there's a way of drawing a volume DMA then I haven't found it. The closest I can get is by adding the "Volume Oscillator" indicator - do you use this and, if so, on what settings? The default seems to be 26DMA vs. 12DMA; Mark talks about volume being below the 50DMA prior to a breakout.

Also, when you click "View full quote" on the Stockreport there is an "average volume" figure - but it is unclear what period the volume is averaged over. This figure is often different to the average volume figure on the Stocks app on my iPhone (which also doesn't  say what period it is averaged over).

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andrea34l Sun 7:41pm 788 of 798

I am wondering if 4imprint (LON:FOUR) is about to break out, especially if it moves further upwards tomorrow - it is above the previous price-high point, and RSI and MACD indicators are both turning upwards, as are MVAs after a brief pause:

5d7e85771e428FOUR_0919_A.png


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MartDK Mon 6:43am 789 of 798

In reply to post #513321

It is on my 'A' watchlist. Arguably, on Friday it broke out of a cheat - albeit on near-average  volume (50D). It briefly put in a high of 3140.6 on 31 July so, at 3010, it's still 4.2% shy of its 52WH. The cup low (2657.5) is very recent - 10 Sept - putting it in the upper end of the risk bracket. Watching it closely here...

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MartDK Mon 6:59am 790 of 798

I completely refreshed my watchlists this weekend. The majority of names now on my 'A' watchlist are investment vehicles: 3 private equity firms (LON:APAX; LON:BPETLON:PIN) and 4 investment trusts (LON:JRSLON:MWYLON:PCTLON:TRIG). Do you have experience of using MM's strategy with  investment vehicles? (I'm relatively new to this.) Do you pay much attention to the NAV premium/discount?

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MartDK Mon 7:04am 791 of 798

In reply to post #509596

Thanks (sorry I've just seen this). It has fallen a delicious 10.1% from its 4 Sept high.  Forming a new cup, perhaps. (I didn't take a position.)

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unwise2 Mon 8:52am 792 of 798
1

In reply to post #513006

I don't use Stocko for DMA, I use quotestream L2 or Investing.com. I don't buy investment vehicles so I have never tried Mark's methods on them.

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MartDK Mon 8:54am 793 of 798

In reply to post #513451

Thanks. Any particular reason why not?

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llwydiaid Mon 12:13pm 794 of 798
3

In reply to post #513386

With regards to investment trusts. I run two portfolios, one in UK smaller companies  and the other in invesment trusts - both of them on Minervini chart principles. Over the past twelve months the IT portfolio has easily been the winner as the UK smaller companies have had a difficult time. Investment trusts are a lot less volatile and so you get stopped out less often, but on the other hand the gains are not as spectacular. As to evaluating the fundamentals, I look at the discount change in historical terms and want to see that there's room for the discount to narrow. I also want to see that the chart of the underlying market is positive. A recent purchase was JPMorgan Chinese Investment Trust (LON:JMC) with the weekly chart shown below:

5d7f6b87ef582JMC.png

The China stock charts look similary positive and the discount has room to narrow - time will tell!  Other charts I'm keeping an eye on are Japan JPMorgan Japanese Investment Trust (LON:JFJ) and American Smaller companies Jupiter US Smaller Companies (LON:JUS) as well as one or two on your list.  One rule I stick to is not to buy trusts at a premium to NAV, so I'd beware of Renewables Infrastructure (LON:TRIG) which is on a 14% premium.  


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unwise2 Mon 12:33pm 795 of 798

In reply to post #513456

I have been investing in individual stocks since 2003, I believe that individual companies offer better opportunities for faster and bigger moves. The flip side to that coin is greater volatility and bigger losses so risk management is important.

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MartDK Mon 2:36pm 796 of 798

In reply to post #513611

Thanks, that's very helpful.  TRIG rang alarm bells with me too: the conventional wisdom is not to buy an IT that is at a significant premium to NAV. But I did wonder whether it was similar to the P/E ratio: the conventional wisdom is not to buy at a high P/E ratio, but MM debunks that - arguing that it shows high interest in the stock and its prospects. I had been wondering whether something similar could be said about a premium on NAV. 

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MartDK Mon 2:37pm 797 of 798

In reply to post #513616

Many thanks.

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llwydiaid 44 secs ago 798 of 798

In reply to post #513681

"the conventional wisdom is not to buy an IT that is at a significant premium to NAV. But I did wonder whether it was similar to the P/E ratio: the conventional wisdom is not to buy at a high P/E ratio, but MM debunks that - arguing that it shows high interest in the stock and its prospects. I had been wondering whether something similar could be said about a premium on NAV."

An interesting point.  With individual stocks Minervini's justification for the expanding P/E is the increasing earnings rate.  Whilst that can be true with individual stocks, it's not going to be possible with a basket of probably 50+ stocks.  Looking at the investment trusts that are at a premium, many of them are income vehicles and the premium is just a mechanism for levelling the yield.  From my experience, the factors that drive price rises in investment trusts are - the underlying market,  the room for the discount to narrow and vcp chart breakouts from consolidation periods.  

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