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Learning from a Market Wizard: Swinging Stocks in the Style of Mark Minervini
Minervini's YTD results couldn't have anything to do with front-running his MPA service could it? I'm an intermediate trader but none of the more experienced trend-followers I chat with have a great YTD gain either - it's been a choppy market fraught with failed breakouts and reversals. When I see Mark say "taking profits quickly" I take that to mean selling into all of his clients and twitter followers buying when he puts a stock out on buy alert in MPA. To be clear I'm not accusing Mark of front-running and have no substantiated evidence... it just seems entirely impossible to have achieved triple digit returns so far this year trading in the style he taught in his books. Deductive reasoning.
-Zimmer
Can you help answer these questions from other members on NexusFi?
I saw those accusations as well. As a past MPA member (about 7 or 8 years ago), I can attest that losing money while following his trades is easy. Unless you are prepared in advance, trying to trade on his signals will almost always lead to bad entries. I then would wait for a 10% gain when Mark exited (he probably had a 10% gain) and instead of having a profit, the trade would end in a loss.
Just saying that it is not that easy to make money even if you get Mark’s signals in real time.
Two of my colleagues are former members as well who have had similar experiences. Mark has the benefit of getting in before sending out the signal! Now THAT is an edge! Not sure about the legality of those practices though...
Just something to note is that with a smoother equity curve you may actually find your overall profit increasing. Profits on large movers will be smaller, but the corresponding decrease in drawdowns, could lead to an increase in annual returns. YMMV and all of that.
This has been a great thread. I know that you use some of Kristjan Kullamagi's techniques - he was a guest on the Chat with Traders podcast back in February and I thought the interviewer did a really good job of covering both his trading techniques as well as some of his personal story.
It was a great interview... I'm hoping K goes on Richard Moglen's interview series too. Just posted yesterday an interview with Kris' teacher Pradeep Bonde: Well worth the hour or so - one of the best trader interviews I've ever watched.
Was quite active today for the first time in a while.
Tried ALB twice. Stopped the first time and then it stuck second time.
Bought MGA, strong breakout all-time highs.
Bought UPS, stopped late day.
Bought LTHM, strong breakout (similar trade to ALB - lithium).
Bought DDS, didn't go too far, thought about closing it when it didn't break out, forgot, hit full stop shortly thereafter.
Net exposure increased and currently 35% invested. Looking to see what holds and if there are opportunities to add. Maybe this lithium trade really goes. MGA looks promising. AZUL is one I got earlier this week that has broken out strongly, showing potential.
After spending a few hours running scans and purging watchlists I narrowed down my focus for the week to come to these ten stocks.
BNTX: Pfizer's partner on the Covid-19 vaccine. Attempted to break out on Friday but squatted on the close. Forming a tight flag setup.
CRMT: Used car dealer operating in Arkansas. Huge earnings surprise in the most recent quarter - the business benefited from rising used car prices significantly more than analysts expected. Technically it broke out last Wednesday, pulled back Thursday and closed right on the breakout level Friday. I'm interested to see if this stock bounces Tuesday or fails through the breakout level.
CRWD: One of the favorite SaaS stocks from 2020 - advanced over 600% from the March lows. Huge earnings growth estimates + management consistently beating estimates = good news. Technically it looks primed for a potential breakout with a clear resistance level in the 226-227 area.
DELL: A less exciting, and less volatile company sure, but great technicals. In a portfolio dominated by higher beta names, a few lower beta names can provide stability. This diversification can't solely be attributed to beta because stocks with different levels of volatility behave differently. Pull up a chart of a utility company and a hot IPO to observe just how different the price action can be.
IBM: Another 'boring' stock but forming an extremely tight flag.
IT: Lots of earnings beats this past year. Price reacted by gapping up and holding higher. This type of behavior is indicative of accumulation. On the other hand, price gaps up that fade suggest large players are selling into the excess liquidity associated with earnings days.
RH: Broke out nicely a few months back. Great example of a technical trade with an economic tailwind - in this case an uptick in home renovations. After the most recent advance price has corrected in a very orderly fashion and began to turn up off the lows this past week. Wednesday-Friday were very tight days with narrow ranges and low volume. I will be watching RH closely if price approaches the 650 level.
UPS: Huge earnings beat on April 27 sparked a significant advance in UPS. For most of May price action has been very tight and a flag has formed. Clear resistance in the neighborhood of 216.80 which I will be watching closely as a potential point of action. If you believe that the economy is still in the early innings of expansion, UPS stands to benefit from the increased volume in online discretionary purchases which would be associated with economic growth and prosperity.
WCN: Talk about a boring business (waste collection/disposal) that just prints money. Consistent growth and positive earnings surprises. Low double digit growth expected for the next four quarters. Clean flag setup after a big multi-month advance. This looks like a potential winner to me - it's unlikely to double in two months like some of the more speculative stocks I follow, but how about a consistent grind higher?
ZS: Playing in a similar SaaS space as CRWD. ZS also has crazy strong growth estimates and a history of positive earnings surprises. Chart was looking like a late stage failed base but the earnings beat gap up on Wednesday may have 'reset' the chart by changing the story ever so slightly. Three tight days sitting right at a previous high from the left side of the chart makes for an interesting low risk entry point if ZS can break out next week.
Hey Zimmer, hope your trading continues to go well for you. Just popping in to mention that I just listened to the Kristjan Kullamagi interview on chat with traders and noticed that he also seems to place a lot of value on relative strength, especially with regards to stocks that hold up well or even print higher lows in the face of a deeper pullback in the broad markets. A topic we discussed here earlier, but one that I continue to believe offers some value to these types of strategies.
Given the seemingly one-way move in the indices of late, I myself have seen a few false breakouts that, in hindsight, seemed little more than cases of a rising tide phenomenon triggering buy stops above obvious resistance. But once those stops were run, many of these breakouts quickly ran out of gas.
