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Learning from a Market Wizard: Swinging Stocks in the Style of Mark Minervini


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Learning from a Market Wizard: Swinging Stocks in the Style of Mark Minervini

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  #101 (permalink)
 deaddog 
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razle View Post
With this criteria, I would like to know if you have a fixed % that you generally risk per trade?

Up to 1% of my capital.

Risk = difference between my entry and my stop.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #102 (permalink)
onetake
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I quickly checked out Kristjian Qullamaggie yesterday. Gonna have to dig into his videos way more. Looks like there's a ton of great stuff on his website too.

I know the breakout systems of (Qullamaggie/Weinstein/Minvervini) say to buy when stocks break out of ATH's but was curious how you would play the PBL chart. Technically the ATH is $62.90 but it seems to me that the top of most of the range was $55.50ish and I'd be more inclined to treat that huge candle at the beginning of the trading range as an outlier.

I mean, at the end of the day one can trade however the hell one wants, LOL, just curious of how others interpret this


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  #103 (permalink)
 mtzimmer1 
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@onetake Kristjan does NOT wait till ATH's or even 52 wk highs to buy. Neither does Minervini. They both regularly take trades on stocks that are just beginning to come up the right side of the base. Minervini calls it a 'cheat' while Kris just calls it a breakout from a tight range. Same principles apply. 55.50ish was the buy point for both MM and KK I think.

PBL wasn't on my radar - looks like it's not listed on US exchanges?

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  #104 (permalink)
 deaddog 
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mtzimmer1 View Post
@onetake Kristjan does NOT wait till ATH's or even 52 wk highs to buy. Neither does Minervini. They both regularly take trades on stocks that are just beginning to come up the right side of the base. Minervini calls it a 'cheat' while Kris just calls it a breakout from a tight range. Same principles apply. 55.50ish was the buy point for both MM and KK I think.

PBL wasn't on my radar - looks like it's not listed on US exchanges?

As near as I can tell the spike on the 24th was caused by a fund releasing a positive report on twitter.
Most of the spike took place in the first 10 minutes.

What it does tell me is that there is supply higher up.

It has had a 7 week consolidation and volume has been diminishing.

The break today might be what Minervini considered a pivot pocket.

Other than ATH it checks most the boxes.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #105 (permalink)
 mtzimmer1 
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Buyable stocks I observed today and added to the list to watch over the coming days:

OZON
ALGN
SEAS
GSM

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  #106 (permalink)
 deaddog 
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mtzimmer1 View Post
Buyable stocks I observed today and added to the list to watch over the coming days:

OZON
ALGN
SEAS
GSM

Do you look at any fundamentals?

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #107 (permalink)
 Schnook 
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mtzimmer1 View Post
Haha. Thatís the opposite of what @Schnook does. He said he doesnít buy stocks when the market is up because most stocks drift higher when the market is up. When the market is down and an individual stock is up itís showing relative strength.

Thatís what is funny about this game - two traders can do OPPOSITE things and both can logically justify their choice!

-Zimmer

Interestingly, though, a few of the other items on @deaddog's checklist match my own. One that stands out in particular is that the breakout bar must be a large, full-bodied candle with high volume. This, actually, is also a form of relative strength; it indicates strong buying interest - at least relative to prior bars, if not also the broad market.

But I don't limit myself to buying new highs. I'm perfectly comfortable buying long base breakouts as well.

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  #108 (permalink)
 mtzimmer1 
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deaddog View Post
Do you look at any fundamentals?



No. My assumption is that there is a reason a stock is showing relative strength. Stock prices donít move based on what I think, they move based on what the collective masses think. These changes in collective opinion manifest as price movement.

I know all of the OíNeil studies show that the biggest winners had high EPS growth prior to making their move, but I havenít been able to replicate those findings with recent data. Seems that most of the biggest movers from 2020 were pre-earnings.

Fundamentals bore me to death and I havenít seen compelling evidence that incorporating them into my approach would actually improve my results. I am interested in thinking about catalysts related to legislative changes, global supply chain, consumer sentiment, etc but that isnít necessarily Ďfundamentalí given that a copper miner with a horrible balance sheet can still see their stock price rise tremendously if there is a big increase in demand or decrease in supply for copper. Always willing to have my mind changed so Iím all ears for your opinion!

I know you were long BHC... what is exciting about their fundamentals? Earning and sales growth both look nonexistent.

Also, how did SEAS look yesterday - meets most if not all your criteria no?

-Zimmer

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  #109 (permalink)
 mtzimmer1 
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Seems that some potential buys from earlier this week are beginning to show signs of holding higher instead of immediately failing back through the breakout. My view is a yellow caution light. Small size for new buys and it would need to be a VERY compelling setup. Otherwise plan to keep on waiting.

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  #110 (permalink)
 deaddog 
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mtzimmer1 View Post

I know you were long BHC... what is exciting about their fundamentals? Earning and sales growth both look nonexistent.

Also, how did SEAS look yesterday - meets most if not all your criteria no?

-Zimmer

BHC and I go back a long way. I made a lot of money when it was Valiant; My strategy took me out almost immediately when it took it's tumble. Since then I have traded in and out. Fundamental wise it is paying off its debt and should be profitable this year. I also look at ownership and see that both Icahn and Paulson own a good chunk. One service I subscribe to shows it undervalue.

I look at the fundamentals but trade on the technicals. That's why I'm not holding BHC right now. Earning coming up in a couple weeks.

SEAS seems to check all the boxes. Terrible Fundamentals but like you say the chart says it all. The thing about decent fundamentals is it makes it easier to eventually find a buyer. The same service that has BHC undervalued has SEAS overvalued (Simply Wall St.)

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #111 (permalink)
 mtzimmer1 
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No time to share charts tonight as we are entertaining guests. Friday I bought ATKR and added to OZON. Today I bought MLM and SBNY. Sold TIGR as it reversed through the pivot after trying to break out. Also sold 1/3 of OZON into strength this morning.

Total exposure around the same 25% mark.

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 mtzimmer1 
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Bought TPR yesterday and OZON today (small pullback buy).

I record every potential trade entry that meets my rules regardless of whether or not I take it. In doing so I can see if I'm capturing or missing the trades that end up working out better and can then discern whether it is random or an opportunity to refine my process. 85% of the entries I've recorded from the past five sessions are currently above their entry price which reads as a prominent behavioral change relative to the past few weeks where most breakouts failed. I am currently<30% invested but looking to aggressively add exposure tomorrow provided everything holds. Perhaps this is just another false start. Only time will tell!

-Zimmer

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  #113 (permalink)
 mtzimmer1 
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Just recently stumbled on Patrick Walker's work. Very clean and simple adaptation and execution of the CANSLIM principles - reminds me a lot of how I imagine @deaddog trades based on what he's shared.

Nothing notable to report. I tried a few positions this week. Most things going sideways, ZIM the only somewhat exciting advance in my portfolio. Still trading conservatively small positions and currently 25% invested waiting to see what happens next week. The earnings beat gap ups that were poorly received and dumped on Thursday was somewhat disconcerting. It tracks that when good news is poorly received buying interest is far from voracious. If demand for equities is high stocks will be bought on any excuse.

-Zimmer

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  #114 (permalink)
 deaddog 
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Never heard of Patrick Walker till now. Googled the name and spent some time watching a Youtube interview with Richard Moglen.

There are some similarities; we're both old farts, both started trading in the 80s where you got your info from a newspaper and charted price by hand, both watched Wall Street Week and took something away from Marty Zweig's comments and both have followed O'Neil's system.

I agreed with everything he said. One thing I might look at is checking the 1/2 hour charts on the days I'm entering on a breakout just to confirm the volume.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #115 (permalink)
 mtzimmer1 
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Amidst the Nasdaq selling yesterday I was fortunate to see some follow-through in the more boring companies in my current portfolio. NUE, and MLM were the notable standouts - steel and concrete. I'm sensing a theme that there may be more money funneling into new commercial construction than I was aware of. I'm going to be dialing in to these types of stocks and looking for entry points.

-Zimmer

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  #116 (permalink)
 mtzimmer1 
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Managed to add some new positions today on breakouts in FCX, CAT, and TFC. The first two play into the developing trend I'm seeing in companies that benefit from new construction. TFC is a bank so they should benefit from rising interest rates which various members of the Fed and Treasury have been alluding to as a distinct possibility in the past few days. All three showing good follow through so far and closing near their highs. Currently 35% invested but if I see breakouts holding I'll start increasing my new position size from ~5% to ~10%+

-Zimmer

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  #117 (permalink)
 deaddog 
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Managed to add some new positions today on breakouts in FCX, CAT, and TFC. The first two play into the developing trend I'm seeing in companies that benefit from new construction. TFC is a bank so they should benefit from rising interest rates which various members of the Fed and Treasury have been alluding to as a distinct possibility in the past few days. All three showing good follow through so far and closing near their highs. Currently 35% invested but if I see breakouts holding I'll start increasing my new position size from ~5% to ~10%+

-Zimmer

The only thing that would concern me is that none broke out on volume. Although the whole market wasn't trading huge volume.

So far so good.

"The days when I keep my gratitude higher than my expectations, I have really good days" RW Hubbard
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  #118 (permalink)
 mtzimmer1 
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Yesterday got ERJ - an interesting Brazilian ADR. They make all types of aircraft and are working on developing a passenger drone. I see it as a company with an established business with a potential big growth kicker in the form of the passenger drone. Would the drone sales actually impact the bottom line? Probably not for many years but it could get the stock more attention which could bring in speculative buyers and drive up the price. Potential catalyst down the road to sweeten the trade.

Today I got FNKO, CLF, and PDCE.

FNKO

Higher lows, clear resistance that everyone could see. Beats earnings (catalyst) and launches through that level on super high volume right off the opening bell. Sold 1/10 midday and moved stop to breakout level. A stock like this SHOULD NOT come all the way back down to that former resistance. If it does there is something seriously wrong and I want out if I'm not already.

CLF

Another play on steel in addition to my NUE position.

PDCE

Only current position in oil & gas. I'm not early to this thesis trade but I also don't think I'm too late. Probably could have just traded XOP and avoided individual stock risk but just liked the look of PDCE and it's relative strength over recent months.

Currently 45% ish invested. That is all for my update. Have a great weekend all!
-Zimmer

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 mtzimmer1 
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This morning I bought CPE on the open. Knowing that it was a FinTwit favorite I wasn't surprised by the volume surge. However I was surprised that /CL was selling off while CPE rallied and also that the oil & gas rally was not broad at all - CPE was the standout exception. Wary as I was I cut it for a very small loss as it started to break down on heavy volume in the late morning.

I did some work with google trends and discovered that search volume for terms "copper stocks" and "steel stocks" surged last week. I imagine that most professionals already know who the big players in those industries are and wouldn't need to search those terms. As such I can deduce that the volume of these search terms is a decent proxy for retail interest. I've done some analysis of Google trends with 'meme stocks' and found that when search volume surges it often marks a high inflection point for the price of the stock. This is due to crowding and information reaching near complete dissemination. Once the number of new buyers slows down the path of least resistance becomes downward especially when the underlying has been rapidly bid up far from it's mean. In seeing these plus the price action of NUE I trailed my stop aggressively on both NUE and CLF and was taken out of both of them today. FCX is my only outstanding position in metals as of today's close.



RVLV broke out strong last Friday and came crashing down with even greater force today. This had me wary of the whole retail sector, particularly apparel and I decided to avoid some setups in retail that I may have otherwise taken.

In other news I read Livermore's "How to Trade in Stocks" last night and was struck by how relevant nearly all the subject matter was to current day. I believe strongly that human nature never changes and as such there are underlying forces present in the stock market that will never change. The way in which these principles can be capitalized on changes over time but the principles themselves persist.

-Zimmer

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