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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

  #111 (permalink)
 
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 mtzimmer1 
Upstate NY
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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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  #112 (permalink)
 
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 mtzimmer1 
Upstate NY
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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)
 
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 mtzimmer1 
Upstate NY
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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)
 
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 deaddog 
Prince George BC Canada
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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)
 
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 mtzimmer1 
Upstate NY
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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)
 
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 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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 deaddog 
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mtzimmer1 View Post
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)
 
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 mtzimmer1 
Upstate NY
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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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  #119 (permalink)
 
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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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  #120 (permalink)
 grausch 
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mtzimmer1 View Post
Having read Minervini's books and studied some of his past trades I have a base knowledge of how he makes decisions yet sometimes he'll tweet out a trade that leaves me scratching my head... always more to be learned.

Another data point that has been difficult for me to reconcile: in backtesting setups and looking at historical trades (O'Neil, Minervini, et al.) I do notice that high volume on the day of breakout seems to be correlated with trade outcome, yet in my live trading (100's of trades now) I don't observe the same correlation. In fact volume on day of breakout has had nearly zero correlation to the outcomes of my trades.

Haven’t been here in a while and actually found this thread via Google. Quite a good read. Have you seen Minervini’s results YTD so far? Up over 100% as of March.

Regarding the two paragraphs I left in the quote, I can answers some of the questions.

1. Mark trades horizontal pivots be they low cheats (lower 1/3 of the base), regular cheats (middle 1/3 of the base) or the breakout of the base. He typically does not believe in diagonal pivots. His pivots could also be based on quite short bases (5 days or less - not sure what his shortest bases would be…). When he misses a pivot breakout and if the stock does an orderly pullback, then he will initiate a pullback buy. The idea would be to then buy a breakout above the bar that touches the pivot. If the pullback is not orderly, then the trade is not taken. Orderly means low volume and the pivot should at least provide some support.

2. Mark takes trades as soon as the stock trades above the pivot. He will wait for volume to come in and expects it to come in soon after the breakout (train on schedule that he often talks about). Generally, the dry-up in volume prior to the breakout seems to be more important. In my own experience, I have also found the same. However, if a stock has really high volume and breaks out of a base, I would choose that trade over one with lower volume. When those high-volume trades run, you can sometimes get your risk multiple covered in day 1.

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Last Updated on May 7, 2022


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