Trading U.K stock market using Mark Minervini strategy

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14th Dec '18 by unwise2

1516 comments 108972 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

llwydiaid

3rd Jul '19

John Laing (LON:JLG) large cap with tight spread. It hit the £4 mark in April and has been consolidating since. Looks like it might be ready to break out.

andrea34

3rd Jul '19

Yay!!! The 15day MVA has just crossed through the 50day; I've held since March. The pre-close update was positive enough, even if with slightly variable wind conditions. Their operations have SURELY got to be the way forward though, with global warming, etc.

monions

3rd Jul '19

Hi Andrea,

15d-MA - that's an unusual one - how come you chose that criteria? Is it Simple or Exponential?
Not criticising, genuinely interested.

ddinksdadd

4th Jul '19

Hi HM, thats quite a screen you have laid out there!

I apprieciate your comment about the 'fuzzier' criteria, wouldnt it be great if we could screen for 'pattern set up'? i think it might need a super computer for that though!

Volume should be relatively easy to screen for however that screen looks like a good starting point so maybe some human interpretation may be needed for a final cut of the candidates. thanks for sharing though I shall give the screen a go and see what candidates it flags up!

fwyburd

4th Jul '19

I mentioned a while ago that I thought Intercede (LON:IGP) might be about to break out. It's been consolidating at 38p and today the 200MA is at par with the 150MA with the former moving up finally and the latter is likely to properly overtake it in the next few days. Is now a good time to top up? Thoughts?
cheers
Francis

andrea34

4th Jul '19

Hi 'Monions',

I have a VERY basic level of understanding of charts and I am not good at identifying particular patterns... so talks of cups and handles is beyond me. But what I like is for all the (simple) MVAs available to me on Stocko (15, 50, 130, 200) to all be in the right order and getting further away from each other as time goes on. So in the case of John Laing (LON:JLG) the 15day is the final line that looks to be sorting itself out now.

I tend to start looking at Golden Cross, New High, and MACD flagged bull stocks and then whittle them down according to what the actual chart looks like, then MVAs, and then RNS research and Stocko Report.

So for example I love the chart of Marston's (LON:MARS) (which I hold as of late), as below.

Andrea

Rusty2

4th Jul '19

Marston's (LON:MARS) chart may look good but the EPS growth seems negative, also debt is very high. John Laing (LON:JLG) does look quite good but not a sector I want to be investing at the moment.

monions

4th Jul '19

Thanks Andrea,

That makes sense. For short MAs I use Exponential as they react better on the short time scales (something I picked up reading Alex Elder).

monions

4th Jul '19

I think John Laing (LON:JLG) looks good on most aspects. The key thing now is for it to break through the 400 which is looking like strong resistance. It's tried to get through three times since April and always fallen back. It was close yesterday but then fell back to 393.

Other than that it could be interesting if it pulls back to 370 which looks like good support.

Rusty2

4th Jul '19

Minervini considers MAs to be the least important of his rules.

Rusty2

4th Jul '19

The other issue I have with JLG is the EPS is forecast to fall significantly for 2019, Minervini is looking for companies that are growing and growing at a faster rate.

andrea34

4th Jul '19

Maybe we need a more general charting post to add to if things should be very Minervini specific on this one.... :-/

monions

4th Jul '19

Minervini considers MAs to be the least important of his rules.

Hi Herbie,

I would tend to disagree. The prerequisite for a share to be accepted as a SEPA candidate is for it to meet the Trend Template - it's point one in the SEPA explanation. If a share meets the trend template, he then looks at the other aspects of SEPA such as earnings, forecasts, growth, margins etc.

The Trend Template relies heavily on moving averages (pg 69-72) - the price relative to 50, 150 and 200MAs are important areas as well as volume changes and higher-highs/higher-lows.

pka

4th Jul '19

Hi HumourMe,

Thanks very much for sharing your screen, which uses moving average and price conditions to try to emulate Minervini's momentum criteria (but not his quality and fundamentals criteria).

I copied your screen and found it gave me about 70 candidate stocks from the UK market. Quite a lot of those candidate stocks have very high spreads and/or have high risk profiles, so are stocks which I personally would not want to invest in.

I then tried adding to the screen the additional criteria of Spead < 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. I think an advantage of restricting one's choice to conservative stocks (i.e. stocks with lower than average volatility as determined by Stockopedia) is that it is likely to reduce the amount of trading one has to do in response to momentum criteria worsening in some of the stocks in the portfolio, and that is likely to reduce one's trading costs which are a drag on perfomance.

Rusty2

4th Jul '19

Well thats what he said, he said least important, It did not say did not matter, here I can even quote him "Moving averages are the LEAST important element of my approach"

llwydiaid

4th Jul '19

Re Intercede (LON:IGP) Looking at the longer term weekly chart, this is still in Stage 1 until it gets past the 40p resistance and would not tempt Minervini - also 5% spread.

HumourMe

4th Jul '19

I copied your screen and found it gave me about 70 candidate stocks from the UK market. Quite a lot of those candidate stocks have very high spreads and/or have high risk profiles, so are stocks which I personally would not want to invest in.

Me too! I have additional criteria, like you, spread, also market cap (>£100m - does much the same as spread) and I also exclude AIM (my broker, SAXO, doesn't do AIM but has very good limit order execution which I use for buy and sell stops). I also have fundamentals and winning styles. After adding these I only have Kainos (LON:KNOS) for the UK! I might have to scales criteria back ...

%200ma <50 shouldn't be there for power plays / high tight flags. This is a CANSLIM criteria to indicate possible over-extended price. For the power play version, inclusion of winning styles is counter productive, as they are typically characterised as momentum traps - it is the flag/consolidation that is the distinguishing structure and you have to be prepared to bail quickly (IMO); I've not yet traded one of these.

I debated whether to post links or a picture. As my screen is influenced by more than Minervini I pulled just the relevant part - and even then managed to add a CANSLIM element by mistake. When using another persons screen I think it important to ask 'why is each element included' and a picture is more likely to encourage that and provoke a challenge if something doesn't seem to make sense.

Rusty2

4th Jul '19

I do hold Kainos (LON:KNOS), bought at 497p 14 March, 2019, the problem with screens is you don't know when the shares would first qualify and it is quite difficult to work out. I think it is a bit extended now, be interesting to hear some other opinions on it. Another one I bought I while back and still qualifies on my Minervini screen is AVEVA (LON:AVV) really not sure whether to sell this now or hold on. I have 9 shares on my screen currently but feel I have missed the boat on most of them such as Ab Dynamics (LON:ABDP), Games Workshop (LON:GAW) and Greggs (LON:GRG).

Benson212

4th Jul '19

I agree with you. William O'Neill strongly recommends investors to look at weekly charts, in conjunction with the daily, to determine whether the stock is in an uptrend or not. In other words, buy the break out on a daily chart which coincides with a weekly bullish chart pattern too.

I noted some traders identified a potential VCP on Solid State (LON:SOLI) but I had some concerns. Although the daily chart is in an uptrend, when you look at the stock on a weekly chart, it lacks upside momentum (see below)

A good question traders should ask themselves is "would I trade this if it was a daily chart?" William O'Neill would argue a stock with a bad weekly chart is somewhat failure prone. Solid State (LON:SOLI) broke out of a nice VCP in late 2013, that was when you should have been invested!

On the other hand, buying breakouts in a trending weekly can significantly improve your odds of success. The chart below is Halma (LON:HLMA) which, showed excellent relative strength during the 2018 correction and broke away nicely from a cheat pivot on 01/02/2019.

This isn't a strict Mark Minervini principle (more William O'Neill) but it does stack the odds further in your favour. Mark shows lots of weekly VCP examples in his books, so I imagine he looks at the weekly too. Determining the trend on a weekly chart has certainly helped me improve my accuracy when trading US shares.

Rusty2

5th Jul '19

I can’t see the last post #615 anyone else having this problem?

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Trading U.K stock market using Mark Minervini strategy

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Unwise2

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