Trading U.K stock market using Mark Minervini strategy

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14th Dec '18 by unwise2

1516 comments 108971 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

unwise2

12th Feb '19

5c62c1211df4cChart-john-laing-1212019.pn

You are right John Laing (LON:JLG) has held up quite well but it is now what MM would consider extended away from the base. There were two opportunites to buy at 330p and after it broke through 340p but the handles were fairly short and easy to miss (I did). A better base formed back in May-Aug with a much more obvious handle. I have attached a chart.

Fundamentally earnings appear to be all over the place between 2016 and forecasts to 2019

zeibots

12th Feb '19

Yes psin it certainly fits the bill. It broke out from strong resistance in a MM set up on 23/08/18 with three times normal volume and is the only liquid (spread 0.06%) share with a decent 6m RS in it`s Industrial Group.
Perhaps not a classical VCP but I think we are too focused on just that. MM will also admit that not all super performers are born that way. I think we should also pay more attention to Relative Strength in terms of MARKET, SECTOR, INDUSTRIAL GROUP and then the share itself. These factors working together are more important than a perfect VCP.
There are many writers who stress this point and quote examples. This subject is well presented by Bruce Kamich in his book `How Tech Analysis Works` (Chapter 12) and Chris Rowe`s `Internal Strength System` just to name a few.
Finally Stocko is a perfect site to check RS.

mmarkkj777

12th Feb '19

T Clarke (LON:CTO) is still my best performing stock since I started adopting the Mark M trading principles (since mid Dec 18),

I've also had some success with Smartsheet in the US, which is my best performing US stock.

I agree that this Thread is excellent, and I appreciate the efforts of Unwise2 to keeps the posts in line with the overall theme. It makes sense in the long run.

I'm still learning a lot and will keep coming back to see what is being discussed.

Rusty2

12th Feb '19

Yes it has, has cropped up on a few of my screens. One thing that did surprise me was the very high operating margin, around 70-80%.

unwise2

12th Feb '19

I think we should also pay more attention to Relative Strength in terms of MARKET, SECTOR, INDUSTRIAL GROUP and then the share itself

Mark has said more than once on his MPA service that early on in his trading career his search approach was:

Market

Group

He then changed his approach to:

Group

Market

His performance improved dramatically, if he finds more than 2 shares in a group setting up he then checks all the other shares in the group. In his books he makes the point that new market leaders typically bottom before the market as a whole, if you wait for market confirmation the leaders may have already broken out of their bases and become extended.

zeibots

12th Feb '19

Yes, you are quite correct and he no doubt uses software where he can move quickly from chart to chart. As you know not possible with Stocko as it is more fundamental orientated. I first use it`s strength that is RS selection and then drill down by using Sharescope where you can move from chart to chart at speed and with volume indicators of my choice.
The results are the same and it saves time for spending more time on the golf course.

dmjram

13th Feb '19

RockRose (highlighted as setting up a pivot last week) broke out yesterday and is following through today.

Rusty2

13th Feb '19

SDL (LON:SDL) has broken out, it was mentioned on here a few weeks ago.

unwise2

13th Feb '19

RockRose Energy (LON:RRE) would have been tricky to buy if you trade with a stop of 10% or less, the pivot mentioned last week around 670p was 70p away from the previous contraction to 600p. It then set up a short handle with a pivot of 690 and a contraction to 630p- less than 10%. However it shot through the pivot yesterday to 724p in the first five minutes of trading. The only likely way to have bought it was after it pulled back

It's crazy but sometimes you can see a cup and handle on intraday charts, I have attached a 5 minute chart for RockRose Energy (LON:RRE) over the past 2 days

psin

13th Feb '19

Reflecting on the "shares, group, market" comment it dawned on me that I had done just that with three of my shares.
That is, JLG, CTO & NMCN - all Construction & Engineering/ Industrials.
Checking through that sector, they are 1, 2 & 3 in the list, particularly when viewing their momentum in the charts.
Lesson learned: check all my researched shares as above.

zeibots

14th Feb '19

Yes interesting that all three have by far the strongest numbers in terms of RS, right through - 6m,3M,1m and 1w, in fact the only ones in this sector where they are all positive. Very strong shares in a relatively poor Industrial Group on the same basis.

zeibots

14th Feb '19

Sorry for my error, I meant Industrial Group not `sector`. Momentum and RS obviously work together.

Jack Corsellis

14th Feb '19

Hi Guys,
I was trying to post a print screen of my excel spreadsheet showing my watchlist with 100's of stocks (UK / US) setting up in Volatility Contraction Patterns to share but it won't work! You can see the list by clicking this link that will take you to my investing blog post, it's all free. Trading Watchlist UK / US stocks

Lonmin (LON:LMI) has just broken out

Future (LON:FUTR) is getting there

Spectris (LON:SXS) has just broken out too

Cheers,

Jack

unwise2

14th Feb '19

Jack,

We have already had this conversation on a thread started by you. You are including VCP's which don't conform to Mark Minervini's guidelines/rules. Have you read his books? I am referring to Lonmin (LON:LMI) and Spectris (LON:SXS). If you own his first book the transition from stage 1 to 2 is listed on page 69.

You are of course free to trade however you want and post whatever you wish but I started this thread to highlight trading that is in line with Marks rules.

In post 226 of this thread I listed the rules Mark never Breaks.

Jack Corsellis

14th Feb '19

unwise2,

A watchlist is just that, a watchlist. You identify stocks that are suitable candidates and watch them potentially develop to trading opportunities. You'll note on Lonmin (LON:LMI) the 50ma is now above the 200ma and previous price and volume action confirms the breakout in my eyes. If you were in at the pivot point you'd be over circa 12% in under 10 trading days, not bad.

unwise2

14th Feb '19

You'll note on Lonmin (LON:LMI) the 50ma is now above the 200ma and previous price and volume action confirms the breakout in my eyes. If you were in at the pivot point you'd be over circa 12% in under 10 trading days, not bad.

At the risk of sounding like a broken record the 50dma crossing the 200dma means nothing to Mark, its the 150dma crossing the 200dma and the 200dma trending upwards for at least a month. It doesn't matter if you pick the breakout above the low cheat or the breakout from the short handle, both occured with the 150dma under the 200dma. Just because the trade worked doesn't mean it will consistently work over hundreds of trades. Mark's method is all about probabilites, his research over a hundred years worth of data showed the vast majority of big moves (from memory 90%) occured while stocks were in stage 2.

You are using Marks name and terminology (VCP) on your website and then ignoring his most basic principle. My concern is an inexperienced investor who has heard of Mark Minervini could come across your content and assume you are accurately representing his methods, which you are not.

Jack Corsellis

14th Feb '19

I make no claim to using Mark's methods word for word. You'll know Mark studied many of the greatest traders way before his time to develop his VCP. I have done the same using Mark's VCP technique whilst also utilising methods from other great traders such as Jesse Livermore, Richard Wyckoff & Ed Seykota.

VCP is one tool in the tool box. Sometimes you need a flat-head screwdriver and sometimes a phillips screwdriver.

zeibots

14th Feb '19

Jack,
It appears to me that you are at a very early stage of learning about VCP and Mark Minervini. Nothing new about the compression concept nor indeed the various Stages. These were clearly described by Stan Weinstein way back in 1988 in his book. The reason for Minervini`s success in open competition is that he has put together a complete trading/investing strategy that contains many important elements. Keep reading.

Rusty2

14th Feb '19

The 150MA has just gone above the 200MA on Lonmin (LON:LMI). You can predict the way they will go as you already have the share prices, so I don't see the need to wait a month, I'm sure there must be programs that can predict the MAs in the future. MAs are like batting averages, 50 day MA is 50 innings.

zeibots

14th Feb '19

Not a true MM setup to buy now but there are some positives. As you know I like RS. LMI in it`s Group of 153 shares comes 7th in terms of RS (93.7) and all those above are pretty untradeable in terms of capitalization and spread.One of the volume indicators( +ve Volume) has climbed steeply since the beginning of October that indicates accumulation in progress.
MAs not quite the same as batting. A duck or a century can make a lot of difference there. I prsonally use exponential values for my MAs. A weighed MA would tweak the front end even more.
Has now retraced to below it's breakout level from a strong resistance so it could go either way.

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Trading U.K stock market using Mark Minervini strategy

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Unwise2

1516 comments

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