Trading US stock market using Mark Minervini methods
Thought we could take Unwise2's suggestion to start a US thread.
Have been a number of breakouts in Mar'19 - to name a few, $YETI , $TTD , $STNE
There were also a number of failed breaks in Feb'19, which would often hit a 52-wk high on a break (even if only base 1 or 2) and sharply reverse. MM himself alluded to this, suggested it was mainly retail buying - generally these were smaller names.
US advantages: low spreads, low transaction costs, larger number of names/opportunities
US disadvantages: FX costs, larger number of names/opportunities (makes tracking more difficult)
I have a USD account with Interactive Brokers for my trading (and anything i do in the US is swing trading - and not investing)
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62 comments
Lakeland Industries ($LAKE) is a small protective clothing company (Cap £131 million) with some strong fundamentals (Stock Rank 99, Piotroski 9, rising revenues, rising margins, rising cash flow etc). The Covid pandemic has helped the demand for protective clothing in healthcare, and the surge in US house building will sustain demand for its products. I suspect it's gone under the radar of the large institutions although some hedge funds (e.g. Renaissance Technologies) are interested.
It does not yet meet Mark Minervini's buy criteria but the price is currently rising and - with the eye of faith - one can see its forming a cup and handle in a couple of weeks. Currently, at $21.32 (spread 14 bps so quite liquid) it looks like a safe buy-and-hold for an ISA, but it could rise much higher.
Afternoon All,
MM featured in an "Investing with IBD" Podcast on 13th Aug. About an hour long and very insightful ...he mentions a few US stocks too recently on his radar.
A worthwhile listen if you haven't done so already.
Cheers, spl183
Many thanks Spl183. A useful podcast.
MM mentions Qualcomm (QCOM), TMobile (TMUS), DMC Global (BOOM), BSTC, and 3i Verticals (IIIV). He owns BOOM and notes that BSTC is a biotech with earnings - rare for a biotech. Interestingly he seems flexible on his fundamentals (EPS, margin and revenue) for certain types of stock like biotechs and allows himself to be guided by the charts. The podcast is a few days old and he recommends going for IIIV over $25 (it's now at $28 so a 12% jump since the podcast.
wilkonz
No worries - and thanks for the v helpful content summary.
Does anyone know if MM only trades in stocks or does he also trade U.S. Options ? I ask since the latter is surging, to extent Q2 volumes exceeded US Stock buy/sell activity for first time due to the surge in retail investor activity via likes of Robinhood, etc etc.
Recently started trading US Options myself, via broker, Tasty Works. To date, I am enjoying and my opinion is that, whilst a more complex product to fully understand ( in addition to the Greeks/ various strategies to execute ) definitely a lot less volatile compared to spread bets/CFDs, and in turn, provides opportunities to profit via strategies such as vertical calls/ credit spread movements (i.e. capped premium downside and can play out based on movement over a daily/weekly/monthly timeframe).
I'd be very grateful also for any insights/ experiences of others who have dabbled in U.S. Options (or even European ones via likes of De Giro) ?
Whilst not strictly an MM topic, utilising MM's screens over U.S. Stocks still applies here. Since you can employ daily momo strategies too (with stops, etc). Last stats I seen were that US markets encompassed c 45% of the world markets, whereas UK was c 3% (!).
Thanks in advance for reading !
Cheers, spl183
Mark doesn't trade options and advises against doing so.
You might find this article on Robinhood and options trading worth a read:
https://www.forbes.com/sites/jeffkauflin/2020/08/19/the-inside-story-of-robinhoods-billionaire-founders-option-kid-cowboys-and-the-wall-street-sharks-that-feed-on-them/?utm_source=pocket-newtab#5222f700268d
A spread bet/CFD will give the same volatility as the equivalent value of stock purchased with the ability to set a guaranteed stop on some platforms. Options will be more volatile with the decaying time premium and jumps when they move into/out of the money.
And of course options will always be taxable - spread bets and stock trading via an ISA/SIPP isn't.
Keep a close eye on $CGEN
Tightening up nicely under the $17.85 line of least resistance
Good call, Jack! CGEN went up to $19.80 yesterday before slipping back to $18.96. Not sure what the catalyst is but it's on the move.
PS ETSY and Garmin seem to be levelling out before another rise and might be worth watching.
More advice needed please. At the moment I'm following XPEL which is a small US company ($464 M) that makes paint protection for the automotive industry. It has just emerged explosively from a saucer and handle pattern yesterday to reach a 52 week high. Trading volume twice the daily average. The fundamentals such as revenue and EPS are not quite as MM recommends - probably because of the pandemic - but still not bad and the prospects look good for next year. There is also not much evidence of volatility contraction although there has been some. The Q2 earnings are out on 12th August before the markets open. I took up a small position yesterday. Do other US followers have any opinions on this one?
X PEL jumped 32% on 12th August to $28.70 on a. good set of Q2 results, with very strong volume. I think it may have a lot further to go as it is a tiny company by US standards and the automotive industry is entering a growth phase.
PetMed Express (PETS) looks as if it meets the Minervini criteria for entry. (Also looks a bit like a cup and handle.) I'm relatively new to Minervini's approach and would value the opinions of more experienced investors.
If you measure the last price contraction (intra day high on 9/7 to low on 14/7) from peak to trough it is over 12%. That is too wide for Mark - he requires a low risk entry with a maximum stop of 8%. It would need a further handle contraction lower than 8% to be a candidate.
How to Make Money in Stocks by Bill O'Neill has many examples of cup with handle patterns as well as other base patterns used by both the CAN SLIM (Bill) and SEPA (Mark) methods - there is a great deal of overlap.
I am no expert on MM, but do like to look for some of the patterns referred to. However, I noticed that PETS are announcing Qtr results on Monday 20th, and from memory Mark did not like holding positions (unless good existing profit built up), going into results.
I will have a look Monday afternoon.
Thanks for flagging.
Greyster
Many thanks greyster and dmjram. I'll watch PETS a little longer and see what happens on Monday 20th with their results.
A little help please: Does anyone know of a broker that will trade US stocks and offers a stop loss facility?
Additionally, I am trying to set up a Mark Minervini esq template on Stockopedia to screen UK stocks, but must confess I am struggling after setting up a trading above 200day ma screen. I am sure some one did one a few years ago but I can't locate it. Can anyone give further guidance please. Thanks
Two I know of which allow $ denominated accounts and various stops/limit orders: Saxo, Interactive Brokers
I've used Saxo for UK/European . IB is US based but I have no experience using them. I think both have trials.
Technically screen for:
%50 day < %130 day, %130 < %200 day
% off high > -30
% of low > 40
As you are looking for a consolidation period to trade a 'breakout' or 'cheat' you might want to add these, to try to pick up shares in a range:
% price last week <10
% price last week >-10
% price last month <10
% price last month >-10
Personally I also have spread < 100
Shares this pass this go into a watchlist. Then after review I delete many of them.
Thank you for your reply, much appreciated. I shall have another attempt and have a look at the brokers you suggest.
Hi, I'm really struggling to find the parameters on the screener as listed above for ensuring that the 50day is above the 130day which is above the 200day. Can anyone help?
Here is a link, which should allow you to take a copy and edit. Below is a picture of some that I mentioned. I threw this together and it contains some of the additional criteria that I find useful - however - this is frequently tweaked.
You have to use advanced to compare X against Y. The search box is also of great use. For the averages you have to click on the little blue arrow to move off the default.
Edit: Taking a closer look definitely needs an edit or two but you should get the idea from this. Sorry - in a rush as have been putting off lunch!
Edit2: If the link works it is now cleaned up a bit more. In addition I have country and debt filters. In general I've found that sorting into order by price change, to identify 'tight days', is a good step before, if the chart 'looks right', adding possibles to a shortlist (a substantial part of Wizard attempts to quantify this). Then I look at the stock report - there usually aren't that many to look at by now. Possibly the US will give more. Criteria can also be toggled on/off which is useful for tightening/loosening criteria.
thank you so much!
$DXCM setting up well once good volume hits
$BILL is worth taking a look at? I think it formed a low cheat and has already broken out at 79.5
Hi
A recent video from Mark and David Ryan (06/06/20), might interest some. It's almost an hour covering useful ground.
https://www.youtube.com/watch?v=anWpGyXmG1k
Regards
Howard
Looks to be a couple of good prospects in the US market
$TEAM is setting up well.
$LVGO broke out 16/06 and is up 12%.
An alternative option for trading US shares is to use a spreadbet account. The FX is not relevant, it's all in £ per Point. You do have to pay an over-night funding fee though, so it suits short term trades. Also the spread is a bit wider, that's their fee.
I already use IG, but the shares available to trade are limited
Everyone else holding US shares with this method take a bit of a kicking last couple of days. Been stopped out of 3 positions today although I do have chance to take a full position on a couple more. Ive about 20-30 shares in various watchlists and about 80% of them were down today. It does look like similar to the UK people are looking at news of places opening back up as a signal to go to the "names".
Has anyone found a stockbroker that offers ISA's, a large range of tradeable U.S shares and a forex fee of less than 0.5% ?
Degiro look interesting but don't offer ISA's. Trading 212 claim no fee's and ISA but look like they have a limited range of shares available to trade. The only way I can see them making money is if they offer a larger bid/offer spread and take a slice.
HSBC has no fx loading and US shares with its investdirect+ ISA.
The platform is a bit clunky with no stop loss/buy stop order options but the best value fx I've found.
Do you know how many different U.S shares can be traded on their platform?
Site says:
"Trade in US equities listed on the New York Stock Exchange and NASDAQ"
So sounds comprehensive though not sure about AMEX though its the smallest anyway.
Cost per trade is high at $29.95 but the savings in fx will dwarf that for large accounts.
Contact no is 03456 08 08 48
I have called HSBC on that number and the member of staff I spoke to and their manager couldn't tell me how many U.S stocks were tradeable on their platform!
Trading 212 do seem to have a fair number of US shares, certainly all the ones I hold are available on there and the spreads on many US shares should not be wide. You can check on their website which ones are available. On smaller companies then yes they probably do not compete with some other platforms and selling maybe an issue. I will open an account with them this year and see how they compare with HL. HL fees are quite high plus a 1% forex fee.
It depends if you want to hold shares within an ISA, if not then there is Charles Schwab who have a UK account, there fees are low.
I use Trading 212. They seem ok although they don’t list all stocks and sometimes struggle with executing orders. I too am looking for a new broker to use with this years ISA allowance. The biggest charge I’m worried about is the exchange fee.
Hi All,
Just wondered what brokers most of you use for US Trading as I have HL, Interactive Investor and AJ Bell which I use for the UK but was debating using one of them or starting another just for US. Any tips would be much appreciated.
Cheers all and have a good weekend
Rob
I use HL but I considering Trading212 as they have no fees, on larger US shares I don't think the prices will be much different but I have not opened an account yet with them. As you know HL charges a 1% forex fee.
Herbie
Did you open an account with Trading 212 or anyone else for US shares if so who? Thanks Ken
Not yet but will do soon as fed up with forex fees. See post 25, they use Trading 212, my issue is they don’t do many AIM shares. You can do a demo on their site, it is quite a bit different from HL. One advantage is you can buy parts of shares which is useful with some of the high priced US ones.
Agree Herbie Forex 1% both ways is expensive I looked at Charles Schwab it looked like 1/2% for Forex and no commission but I guess the price will reflect the trading costs
Charles Schwab when I looked into it had no forex fees but you have to have a US$ account, so the cost is converting your £s into $s to start with, after that there will be no costs on US shares. I have not done it as my US shares are limited and I prefer having them within an ISA for various reasons. Prices should be the same as many US platforms have nil or low cost trading.
I use Interactive Brokers for US stocks.
This thread has been mentioned on the Minervini UK thread, ZM has been mentioned and I think there are quite a few opportunities in the US market at the moment.
What screener do you use to do MM style trades?
Have closed out EVTC at 30.75, held into earnings (which was a risk), and the numbers were solid - but not stellar.
There doesn't appear to be much volume coming through, so would view this as a fairly unappealing share to move higher - limited demand, limited appeal (growth is pretty muted at 8% y/y).
Believe there are better opportunities out there.
Qualcomm broke out yesterday on significantly higher volume - I'd expect it to break $80 by the end of the week.
nice move on the royalty dispute - agree this seems to have some momentum now. Amazing that such a large mcap can still make such a move once an overhang has been removed
I bought this on 19 Feb when it broke out of a tightish spot and then two days later, it got clobbered and I got stopped out. It does look like it wants to go higher though so hopefully you'll get that cushion to enable you to hold.
M.
entry at 29.50 - what to see a couple of days follow through - ideally with a little volume too.
Stop is at $27, but the likelihood is i would pull the trade if it reversed much before this level (potentially around $28, very much depends on price action). if it setup again then i would consider re-entry.
Results out 1 May, exp. for EPS of 0.48 (noting it has beat the last 4 quarters). If the trade is still going, and i have a cushion (10%), then i would hold into earnings.
currently like the look of Evertec (EVTC) - would buy on break of 29.50 pivot on expanded volume
Ive just sold Five9 (earlier in the week, but maybe sold to early).
Not sure if you can see the above properly - this is generally how i narrow down a watchlist after running stocko screens.
From the suggestions, i like FIVN , PYPL and VEEV
My only issue is these are late stage 2 plays - so i would have fairly modest expectations and likely book any profits quite early (if they setup)
MM will sometimes buy pullbacks if the pullback is no more than 10% and on lower volume days than the breakout
£IRDM £BCSF £CWT £ARRY £FIVN £CMG £SUI
A few on my watchlist that maybe of interest are: FIVN, FL, OFG, PCM, PYPL, SPLK, VEEV.
Saw that VEEV ceo earned (loose term) £87m in share options. Quite incredible really.
Yes a good idea as I’ve just started trading US stocks based on MM, I was lucky to catch both YETI and TTD, I sold both but looking to buy back in on a pullback, not sure of MM strategy on that. I agree there seems to be far more choice in the US market.
Think MM is more of a fan of breaks - i'm not sure he would re-enter unless setting up a new VCP - as price as moved 15-20% from the initial VCP setup.
David Ryan is someone who would buy on a pullback, he has a slightly different technique
Thanks, I'm not finding much in his first book about it but did read about Pause, a stock will pause over a number of days or weeks then form a plateau which should be within 5-10% of the high point. Then it is set up to buy if it moves about the pause level. He also has pullback buys on his watchlist. So YETI could be one. TTD has already broken out above the pause, maybe setting up again?
A really great idea. I'll be looking in every day and contributing where I can.
current watchlist is Vericel, LifeVantage, AudioCodes, eHealth
no open positions
Had a look at those, all look pretty good to me, Audiocodes is Israeli so probably not for me. I assume you are waiting for these to reach new highs before buying? I note eHealth was up 10% yesterday.
yeah i'd want to see a pivot of some sort, Vericel was close to setting up in mid-March, but didn't quite make it. eHealth still looks good, but has been going through some distribution over the last couple of weeks - the original VCP was around $40 and i missed that... so is it strong hands moving to weak hands?
i would want to see a new contraction point on any of the watchlist (adding Five9, VEEV and PYPL) - entry is usually on an intra-day break of my line, where volume in the first hour is around 50% of the 10d average vol.