Trading U.K stock market using Mark Minervini strategy

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14th Dec '18 by unwise2

1516 comments 109004 reads

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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About the Author

Unwise2

Premium Member

1516 comments

Rusty2

7th Feb '19

Howard, thanks for that, I have held Bioventix (LON:BVXP) for about 4 years, it is not one to trade frequently as the spread can be very wide. Churchill China (LON:CHH) spread is over 5%, shares have fallen back about 15% recently.
I also hold TNOM since Oct 2018, came up on my MM screen. MIPS is another one that qualified recently and I hold. Orexo also does, I'm considering at the moment.

HumourMe

7th Feb '19

Is there a trick to getting the measure to persist or have you manually labelled them up?

unwise2

7th Feb '19

The diagonal lines and the % are manually added, however once its done it stays there unless you delete it.

Dennis Ayling

7th Feb '19

Unwise2, thanks for the example of how you calculate a VCP & label it up on your chart. I find the start / end (& hence the high & low) for each contraction is not always obvious on the chart & therefore calculating the volatility percentage can be subjective (like a lot of things in T/A).

This is why I was experimenting with the Average True Range (ATR) indicator using various time periods however this does not give the results I was expecting. I also wanted to use an indicator so that I could program a scan to search for such conditions. I will update if I find something that works, otherwise I'll be doing somethimg similar to what you are doing.

Dennis.

Howard Adams

7th Feb '19

Hi Herbie

Thanks for the ideas I'll take a look.

Regards
Howard

unwise2

8th Feb '19

5c5d4fe2de01aChart-kin-and-carta-812019.

Dennis

Not all VCP's are a classic base shrinking in depth on the right hand side, some can be flat bases that are several weeks long, I have attached an example from Mar/Apr 2018, I actually traded this as it broke out.

Glorenfeld

8th Feb '19

Is Beeks Financial Cloud (LON:BKS) possibly setting up a cup-with-handle? The cup would be around 20 weeks long with the top starting in Sep 18. Best seen on a weekly chart.

unwise2

8th Feb '19

To me Beeks Financial Cloud (LON:BKS) looked like it was setting up a low handle from 22.1.19 until it fell below 118p on 06.02.19. The current contraction is now 130-110p which is too deep for me.

Rusty2

8th Feb '19

Bioventix (LON:BVXP) a potential cup-with-handle? Others; Ab Dynamics (LON:ABDP), Burford Capital (LON:BUR), Bovis Homes (LON:BVS), EKF Diagnostics Holdings (LON:EKF), Fevertree Drinks (LON:FEVR), H & T (LON:HAT), Hastings Group (LON:HSTG), Kainos (LON:KNOS), Macfarlane (LON:MACF), Persimmon (LON:PSN), Sanderson (LON:SND), Scisys (LON:SSY), Somero Enterprises Inc (LON:SOM), SSP (LON:SSPG), Tristel (LON:TSTL), Universe (LON:UNG).

unwise2

8th Feb '19

Herbie,

I didn't start this thread so people could post lists of stocks for me to past comment on, that could end up taking a lot of time if it snowballed. I have previously mentioned Burford Capital (LON:BUR) and Ab Dynamics (LON:ABDP) on this thread. I will say several of the shares you have mentioned are well below the 200dma and some of them have a downtrending 200dma. Also some of the suggested cups are over 10% deep. I have said some of Mark's rules have wiggle room but some rules he never breaks are:

Don't buy a stock below 200dma

200dma must be trending up for at least a month

Maximum stop 10%

I have never seen a stock put on his watchlist when the 150dma is below 200dma.

Serica Energy (LON:SQZ) is a reminder today that you can have a great setup and the pivot point still fails.

Rusty2

8th Feb '19

OK, I was just checking as I'm no expert on charts and patterns. I have not seen the 10% rule before on cup and handle, in Minervini's book his examples are over 10% deep?

unwise2

8th Feb '19

Over 10% is fine on a cup, but the final contraction, usually called the handle (where you would place a trade) needs to be sub 10%. Can you give an example of an over 10% handle from his books? I can't think of one.

Rusty2

8th Feb '19

No I meant the cup, I thought that what you were referring to, not the handle.

Dennis Ayling

8th Feb '19

Unwise2, thanks for the chart of a 'compressed' VCP. Maybe you should change your handle as you clearly do have some wisdom on this subject matter.

I'd just like to say that this is a brilliant thread, everybody willing to share thoughts, ideas etc. for the benefit of all.

My education continues.

D.

zeibots

10th Feb '19

Yes, this is a brilliant thread with 14,000 hits so far and quite something in a basically fundamentally orientated site like Stocko. We should certainly continue with the MM discipline as you have suggested. Personally, I have now converted our local investment group to the MM approach and we are geared to benefit when the UK market shows signs of more recovery.
I would be interested to meet some of you in person. I live in the New Forest area near Ringwood perhaps some of you are nearby.

BottleMerchant

11th Feb '19

Serica Energy (LON:SQZ) is a good example of a failed breakout.
This recent tweet by Mark Minervini advises caution in the current market conditions:
https://twitter.com/markminervini/status/1093515316448120832

It should also be noted that Mark Minervini's investment strategy looks at both price action and fundamentals. He likes to see sales, EPS and margin growth. There is a section in his book where he describes his Code 33 for the perfect share.
I have my own Code 33 screen and so far the only UK share that passes all the tests is Shoe Zone (LON:SHOE)

unwise2

11th Feb '19

This recent tweet by Mark Minervini advises caution in the current market conditions:

I completely agree, the maximum exposure I have had in stocks recently has been around 10%.

The buys I have made have been toe in the water to see if I can get any traction.

It should also be noted that Mark Minervini's investment strategy looks at both price action and fundamentals.

Forecast revenue growth and EPS growth looked great for Serica Energy (LON:SQZ), doesn't matter though if my stop gets hit I'm out.

Rusty2

11th Feb '19

Ab Dynamics (LON:ABDP) for anyone interested the spread at the moment is only 18p, this has really come down for when I was looking a few weeks ago when it was 100p. I have just opened a small position.

zeibots

11th Feb '19

Yes SQZ is a failed breakout. Good RS 6m (80.5) but a poor Industry Gp ranked 21st, RS -4.3. not worth a punt I don`t think.

psin

12th Feb '19

Another of MM's pointers in his Wizard book is to look for shares that have held up during a period such as the one we have been currently experiencing. May I suggest that JLG fits the bill?

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Trading U.K stock market using Mark Minervini strategy

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Unwise2

1516 comments

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