Mark Minervini's Trend Template Question

Hi guys,

Mark Minervini talks about his trend following template in his trading book. It looks like this:

1. The current stock price is above both the 150-day (30-week) and the 200-day (40-week) moving average price lines.
2. The 150-day moving average is above the 200-day moving average.
3. The 200-day moving average line is trending up for at least 1 month (preferably 4-5 months minimum in most cases).
4. The 50-day (10-week) moving average is above both the 150-day and 200-day moving averages.
5. The current stock price is trading above the 50-day moving average.
6. The current stock price is at least 30 percent above its 52-week low. (Many of the best selections will be 100 percent, 300 percent, or greater above their 52-week low before they emerge from a solid consolidation period and mount a large scale advance.)
7. The current stock price is within at least 25 percent of its 52-week high (the closer to a new high the better).
8. The relative strength ranking (as reported in Investor's Business Daily) is no less than 70, and preferably in the 80s or 90s, which will generally be the case with the better selections.

Does the stock price HAVE to be within 25% of its 52-week high or can it be above it's 52-week high? Say the stock meets all the criteria but it recently broke out of a price consolidation and its 6% above its 52-week high, is that OK?

Thanks

 

It's better above the 52 week high. No overhead resistance.

 

Simple technical distillation...

The issue is above some moving average which is in an upslope*. Give the BOD (Benefit Of The Doubt) to the upside for now.

* Classically, the issue is above the 50 MA and the 200 MA.. and both MAs are in an upslope.

 

Thanks for the input. I have another question. According to William O'Neil, founder of Investor's Business Daily, when a stock advances in a bull market it will advance 20% on average after breaking out of a base before going into another intermediate-term base.

Would you buy a stock that meets Minervini's trend criteria but has already advanced, say, 15%? According to IBD, it's ripe for a correction soon. Victor Sperandeo talks about this in his book, "Trader Vic II: Principles of Professional Speculation." He calls it market life-expectancy profiles. According to him, trading is all about managing odds. My take on it is that if a stock has advanced 15%, the odds are against it continuing its uptrend.

Should I instead use Minervini's template to find stocks early in their trend instead? For instance, instead of using Minervini's rule "The 200-day moving average line is trending up for at least 1 month," should I make it a maximum of 1 month? That way I catch the trend early. A stock that has a 200-day moving average trending up for 6 months may be ready to correct, and thus not a good stock pick.

What do you guys think?

Thanks

 

I'd go with what Minervini says. He's the expert.

 

I took a few minutes to test this out. I added some basic filters and a trailing stop to it. Stats, graphs, and code are attached below. Thanks!

 

Minervini also looks at the fundamentals of the company. Very picky about buying the right stock at the right time.

 

Could I just add a high EPS rating from IBD?

So it would like this:

1. The current stock price is above both the 150-day (30-week) and the 200-day (40-week) moving average price lines.

2. The 150-day moving average is above the 200-day moving average.

3. The 200-day moving average line is trending up for at least 1 month (preferably 4-5 months minimum in most cases).

4. The 50-day (10-week) moving average is above both the 150-day and 200-day moving averages.

5. The current stock price is trading above the 50-day moving average.

6. The current stock price is at least 30 percent above its 52-week low. (Many of the best selections will be 100 percent, 300 percent, or greater above their 52-week low before they emerge from a solid consolidation period and mount a large scale advance.)

7. The current stock price is within at least 25 percent of its 52-week high (the closer to a new high the better).

8. The relative strength ranking (as reported in Investor's Business Daily) is no less than 70, and preferably in the 80s or 90s, which will generally be the case with the better selections.

9. IBD EPS Rating 85 or higher

 

Not sure about what your concern is but if you do the math right, highest in 52 wk is automatically the high value. if it breaks above 52wk high then your code should treat the value as 52 wk high., Right ?...
All you have to test for 1-close/52wk high < .25 ?...

 

I believe it's a little more than that. You have the book, I'm sure it's in there.