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Learning from a Market Wizard: Swinging Stocks in the Style of Mark Minervini
1.8 LOW Daily
$LOW is another play on a continued boom in new construction and remodels. Technicals look great to me with volume drying up in noticeably in the past two weeks. Potentially emerging from this cheat here.
1.8 DSGX Daily
$DSGX: Talk about a business with consistent revenue and earnings growth... the numbers aren't crazy but seem very sustainable. Long base with VCP characteristics. Nice end of day breakout today. Interested to see if the buying continues into Monday.
Week 1
Ended Week 1 with a YTD gain of $1,386 and 2.27%
On Tuesday I passed on a setup because volume did not increase as the stock traded through the pivot price. The next day the stock ripped up 9% prompting me to question whether or not this volume requirement is well-based. I checked my stats for the past four months and determined that volume on the day of breakout had little to no noticeable correlation to trade outcome. This experience was a positive as it inspired me to remove a baseless entry condition.
Bought TGTX @ 55.93, Stop 51.30
Bought NTRA @ 113.91, Stop 108.42
Sold DSGX ahead of stop in order to....
Buy PYPL @ 243.72, Stop 233.82
1.13 TGTX Daily
In hindsight I think the Pocket Pivot was the better buy location but I'm long from 55.93, stop 51.30. Like this HTF setup but not seeing much followthrough yet. Will give it benefit of the doubt.
1.13 NTRA Daily
Hard to find a short-term Cup w/ Handle that looks much nicer than this one. Love the volume taper as price came up the right side and the tight ranges of the past three days. Long from 113.91
1.13 PYPL Daily Marked Up.png
I see this little Cup w/ Handle as a continuation or secondary base after the longer VCP that formed between September and December. $PYPL is just a great all-around CANSLIM name that checks all the right boxes.
Open Positions:
OZON
LPRO
KSS
LMND
LOW
TGTX
NTRA
PYPL
117% invested here. Sold DSGX in order to buy PYPL because I liked the setup on PYPL but didn't want to increase my notional exposure. My positions have some traction but it doesn't feel like a frictionless environment enough to justify getting deeply into margin.
Somehow I missed Thursday and Friday of last week!
1/14/2021 (Thursday)
Sold 1/4 OZON (1/4 remaining)
Sold 1/4 LMND (1/4 remaining)
Stopped out TGTX (0 remaining)
Sold all NTRA (0 remaining)
Sold 1/2 PYPL (1/2 remaining)
Wednesday night my scans turned up only seven buyable setups (in the past 4-5 months this last has gotten up to 40 names at times) which had me in caution mode. TGTX closed near lows on Wednesday and NTRA closed below the pivot after moving up a decent amount. Because breakouts weren't getting much traction and the watchlist was slim I was very aggressive with closing positions and reducing exposure.
1/15/2021 (Friday)
Sold 1/2 PYPL (0 remaining)
Sold 1/2 LPRO (1/2 remaining)
Bought 1/10 PLTR (diagnostic position)
With the early session weakness on Friday I was pleased to have reduced my exposure significantly the day before. At this point I was fully in caution mode. As opposed to not trading I take very small positions to serve as real-time live diagnostics. These small positions won't really push the P/L needle either direction but they will give me valuable information on the pulse of the market. Once these and any previous positions not stopped out during a correction begin to gain traction and the watchlist of buyable setups begins to widen I greenlight bigger size for any new opening transactions. This method of portfolio management and position sizing will likely decrease performance marginally during short and shallow corrections but make up for it in spades during a protracted bear market or crash.
On balance my three diagnostic positions are still not getting much traction. CALX was a nice breakout today. TT was a somewhat weak close. PLTR had neutral action today.
Now have six of these smaller positions open and still not getting much traction on any but TDOC and, to a lesser extent, CALX. Seems that sizing down has been the right decision thus far. Will continue to trade small until conditions improve.
Stopped on RDFN
Sold 1/2 PLTR at 2R (1/20 remaining)
My diagnostic positions have begun to gain traction with only one of the five hitting stop, one down slightly, and three showing unrealized gain. TDOC was a nice breakout that has held up thus far. PLTR chopped sideways but then broke out strongly today. Nothing crazy in CALX but appears to be constructive price action post-breakout.
Number of buyable setups seems to be on par for Mondays so far this year despite tightening up my scan criteria today.
Overall I feel that the market has given me signs to begin getting more aggressive. Pending price action I intend to scale up size for new positions next week to at least 1/2 size from 1/10.
Interesting data shared with me by a trading colleague practicing a similar approach suggests that both Average Daily Dollar Volume (left) and Average Daily Dollar Volume divided by Market Cap or Percentage of Shares Outstanding Transacted per Day (top) impact the expectancy of breakout trades. Credit: https://twitter.com/enter_order
Liquidity and Market Cap vs. Expectancy
My takeaway from this is to filter out all stocks that don't satisfy both of the following criteria: 50-Day Median (decrease effect of outliers) Daily Dollar Volume > $100M AND MDDV / Mkt Cap > 1%
This effectively wipes out over 2/3 of the scan results. Considering this I see the 15 setups currently buyable as well above average relative to the looser scan I've been running prior to today.
