MARK MINERVINI'S OFFICIAL BLOG

Q&A with Mark Minervini 1/18/12 - Your Questioned Answered

2012-01-18T11:21:00.009-05:00

Q: You recommend holding only a few names (up to 7-8) in accounts smaller than $1M. Many of the stocks you trade are small caps which have the added danger of large, overnight gap downs, especially during earnings. How do you deal with the added risk that would put a major dent in your account even though you may have tight stops? –Dave

A: If you divide your account over 8 positions (12.5% each) and you average 7% on your losing trades, you are risking 0.875% of equity per trade. That does NOT represent excessive risk as far as I’m concerned. However, I would suggest that you risk no more than 1.25% of equity per trade. I would also suggest that you NOT concentrate in less than 4 names (25% positions).

-MM

Q: At what point do you move your initial stop higher (assuming it is a long position)? Is it moved higher incrementally as the price goes in your favor, or do you wait to have a certain multiple of R before you at least move it to breakeven?
–Bob

A: I generally wait and allow the stock the initial stop until it reaches my historical average gain. If that coincides with the profit being at a multiple of my risk as well, then it’s even more likely I will start to think about choking off the trade and moving my stop to at least breakeven.

-MM

Q: Do you have minimum earnings and revenue cutoffs for the current quarter? -Pat

A: In most situations I like to see the current quarter show at least 16-18% for earnings and at least 8% growth for sales. However, to increase your chances of latching onto a big winner, you should look for stocks with 30-40% earnings or greater displaying strong double-digit growth in sales.

-MM

If you have a stock trading question you can submit it to askmarkminervini@gmail.com and then look for your answer here each week. Keep in mind, Mark answers questions in the order they are received.

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COMING TO A MAJOR CITY - A Weekend That Will Transform Your Trading For Life!

2012-01-17T15:08:00.005-05:00

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Thank You!

2012-01-16T19:10:00.002-05:00

I would like to say thank you to everyone who came to Rioz today where I sponsored Newt Gingrich in South Carolina.

Q&A with Mark Minervini 1/11/12

2012-01-11T18:46:00.011-05:00

Q: What does volume mean anymore? Does it have the same significance as it used to with so much trading volume being generated by HF trading that it skews the real trading volume? -Mike

A: The market doesn’t change much over time, however, certain measurement tools may have to evolve. For instance, the 9:1 volume ratio isn’t what it used to be; you now get many more signals than in the past. I still rely on overall market volume for determining accumulation or distribution and I think it remains a valuable tool. Volume should be related to price. With individual stocks, volume can give big clues. I use volume on weekly and daily bars.

-MM

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Q: With regard to your 'pilot' trades, what size (as a percentage) would they be relative to your usual trades? -Richard

A: Generally a ¼ to ½ my normal size position. The key is that you trade smaller than normal. Once you make some money on a few names then you can step up your exposure and even add more positions. Trading is not an on/off business. Be incremental and don't be in too much of a hurry. Bull markets don't end overnight.

-MM

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Q: Do you believe one should concentrate in 5 or 6 stocks, up to $1m portfolio? -Joe

A: 25% positions is generally my maximum concentration. If liquidity permits, yeah I think you can put 1 million in as little as 5-6 names, but as always you should us stop losses to protect yourself.

-MM

If you have a stock trading question you can submit it to askmarkminervini@gmail.com and then look for your answer here each week. Keep in mind, Mark answers questions in the order they are received.

Find a Sound Strategy and Stick With It

2012-01-11T12:44:00.009-05:00

Most traders hope to achieve big success in the stock market, but the fact is few do. Over time most investors realize only mediocre results at best. There are a few major reasons for this lack of success.

The first reason is obvious; most investors don’t have a winning plan or a good role model to begin with. They have not taken the time to study and understand what really works in the stock market, so they end up listening to someone else, usually someone who never had big success in the first place.

But, here’s the real problem: Most investors even if they had a winning plan wouldn’t follow it. Oh sure, maybe they would follow it for a while. But, eventually, if things don’t work out as expected, they give up on it.

99% of investors have unrealistic expectations; not with how much they can earn, but with how it will be achieved.

The stock market offers the opportunity for virtually unlimited reward, however, it's not easy. Therfore, you should go into trading with the attitude that it’s going to take a great deal of work over an extended period of time.

At some point, you WILL feel like quitting. At some point, you WILL feel like your strategy doesn’t work anymore. At some point, another strategy WILL entice you.

But, how could you get good at something if you quit and look for something else every time the going gets tough? No strategy works all the time. In order to be a flower that blooms in June, you can’t be a flower that blooms in May.

Have big long term goals, but realize that you must specialize if you want to be a master at something. Specialization means sacrifice.

There are always a myriad of ways to become successful and anyone of them could change your life, but you have to choose which one it will be.

Mark Minervini

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Heed the Market Not the "Experts"

2011-12-19T14:28:00.006-05:00

In 2007, Countrywide Financial was being touted by some of the most successful money managers as a well-run company offering solid value and a good prospect for investment. Some of these managers were buying the stock because it was “cheap” with good management. Down more than 60% from the price it was trading at just seven-months earlier, to some, CFC appeared to be a bargain.

Capital Research and Management Company reported that as of September 30, 2007 its ownership of CFC stood at 47 million shares. Despite that “expert” vote of confidence, the stock still fell from $45 to under $5 in just 12-months.

Even if you hold a "good" company, in a hostile market environment, Wall Street may throw out the proverbial baby with the bath water as the so-called good companies get punished along with the bad ones. An industry-wide problem or a severe bear market can result in even the best investors in the business getting clobbered if they refuse to sell and cut their loss short.

Legg Mason Capital Management (LMCM) was the largest shareholder of Countrywide Financial (CFC), holding about 11.8% of the company’s shares outstanding as of December 31, 2007.

Early in January 2008, CFC announced it had agreed to be acquired by Bank of America (BAC), with CFC shareholders receiving 0.1822 shares of BAC for each share of CFC. CFC shares traded over $40 per share a year earlier. The BAC offer valued them at under $8.

In a portfolio commentary dated February 10, 2008, legendary Bill Miller, Chief Investment Officer, Chairman, and Portfolio Manager of Legg Mason Capital Management, Inc. said: “We were quite surprised by the decision to sell the company at close to a seven-year low in the stock price, and agreeing to a bid that amounts to only 30% of book value and under 3x consensus earnings for 2009… What makes the decision puzzling is that the company was seeing solid deposit growth, has no apparent capital problems, was not forced by the regulators to seek a merger partner, and is in sufficiently sound condition to have declared its regular quarterly dividend at the end of January.”

Nice speech, sounds logical however; it means nothing compared to the verdict of the market. Stocks don’t care about speeches or who gives them.

You will have a much greater chance of success with trading if you learn to listen to the market not the so-called "experts."

WHAT IS A “GOOD” STOCK

So then, what makes for a “good” stock? Safety doesn’t come from holding on to good stocks; none exist. There are only stocks that go up and stocks that go down, and then there are good companies too. You must learn to differentiate between a good company and a good stock.

If you’re an investor, a stock is good when its price rises above where you purchased it. While the company may have good management and a solid balance sheet, this is not an excuse to hold onto your position in the face of a declining stock price that could very well be discounting a future problem that isn’t yet apparent.

Even if there isn’t something wrong with the company, it may just be that the stock price has gotten ahead of its earnings and it simply needs to go through a corrective phase. Unfortunately, even for some of the best companies, these corrections or dormant price periods can last for many years or even decades.

Ex CEO of the failed insurance company AIG referred to his company and said “It’s (AIG) a national treasure.” On September 16, 2008 he commented: “Most of my net worth is in AIG, I never believed this was possible”

On 2/23/2009 AIG’s stock price traded at 0.45 cents and had lost more than 99% of its value.

So then, if Hank Greenberg and Bill Miller didn’t have a heads up to run for the exits, what makes you think you know much better? The stock price knew!

Mark Minervini

FREE SEMINAR - New York City - February 20, 2012

2011-12-09T11:25:00.006-05:00

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A "Lockout Rally" is a Sign of Strength

2011-12-06T00:29:00.010-05:00

Before jumping in with both feet, one way to confirm that the market has indeed bottomed is to look for additional stocks setting up behind the first wave of emerging leaders. During the first few months of a new bull market you should see multiple waves of stocks emerging into new high ground, during which general market pullbacks will normally be contained to 3% to 5%.

Many inexperienced investors will be looking to buy a pullback, which rarely materializes during the initial leg of a new powerful bull market and from the onset may appear to be overbought.

Typically, the early phase of a move off an important bottom has the characteristics of a “lockout rally.” During this lockout period, investors wait for an opportunity to enter the market on a pullback, but that pullback never comes. Instead, demand is so strong that the market moves steadily higher, ignoring overbought readings. As a result, investors are essentially locked out of the market.

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If the major market indexes ignore an overbought condition after a bear market decline and your list of leaders expands, it should be viewed as a sign of strength. In order to determine if the rally is real, up days should be accompanied by increased volume while down days or pullbacks have lower overall market volume. More importantly, the price action of leading stocks should be studied to determine if there are stocks emerging from sound, buyable bases.

Additional confirmation is when the list of stocks making new 52-week new highs outpaces the 52-week new low list and starts to expand significantly. At this point, you should raise your exposure in accordance with your trading criteria on a stock-by-stock basis. As the adage goes, "It's a market of stocks, not a stock market."

In the early stages of a market-bottom rally it's absolutely critical to focus on leading stocks if your goal is to latch onto big winners. Sometimes you will be early. Stick with a stop-loss discipline, and if the rally is for real, the majority of the leading stocks will hold up well and you will only have to make a few adjustments. However, if you get stopped out repeatedly, you may be too early.

Mark Minervini

To the "you don't get it" OWS crowd

2011-11-29T09:24:00.007-05:00

In response to the small but important group of concerned Americans who have recently commented “you don’t get it” referring to what OWS is about. I get exactly what I see, hear and read. There are lots of people who seem to be not getting it.

Maybe people would understand that OWS is protesting corruption and fraud and not Wall Street itself or a capitalistic system IF it didn’t actually say “We don’t need Wall Street” right on the OWS website. THE OWS WEBSITE READS: “We don’t need Wall Street or politicians to build a better society” http://occupywallst.org/

It doesn’t read we don’t need corrupt or fraudulent individuals on Wall Street or in politics. IT SAYS: “WE DON’T NEED WALL STREET.” I disagree with the “we don’t need Wall Street” part. And, if in fact you really feel we don’t need Wall Street to build a better society, then I see certain about of hypocrisy taking place.

Certainly, I don’t condone corruption and fraud. But, the “we don’t need Wall Street” language says something much different. It says we don’t need the very principle that made this country great in the first place.

Corruption takes place everywhere and that’s the enemy, not capitalism which makes everyone’s life better and encourages innovation, creativity and progress. That’s MY message. State YOUR message clearly and the message will be interpreted the way you intend.

Mark Minervini

To the Occupy Wall Street crowd

2011-11-21T18:02:00.007-05:00

As you woke up and got ready to make your way over to the Occupy Wall Street protest rally today you may have brushed your teeth with toothpaste made by Procter & Gamble or Colgate, checked your e-mail on your Dell or HP computer utilizing a Windows or Mac operating system, got directions to the protest through Google Maps, then put on your Nike, Crocs, Uggs, Steve Madden or perhaps Timberland footwear, slipped on your Wrangler or Lee jeans and perhaps your Columbia or Under Armour shirt or sweater. After you got dressed you jumped in your Ford or GM car, called your mom on your iphone or maybe text messages a friend from your Blackberry, slipped on your headphones and fired up your ipod, and then stopped to get a quick convenient breakfast or coffee at Starbucks or McDonalds, and then made your way over to protest Wall Street.

Did it ever occur to you that all of the above was financed by Wall Street capital; all public companies. You should ponder and better yet research what life might be like without capital markets?

Oh by the way, if you happen to have a sick parent, grandparent, loved one or friend, you should look into where all those medications keeping them alive came from; who manufactured them and where the research dollars came from for development and how many jobs they create.

I could go on and on, but I hope you’re smart enough to get my point. Your anger is misdirected… try 1600 Pennsylvania Avenue and the Capital.

If you really want to protest Wall Street don't be a hypocrite... be a real protester and stop using products and services derived from Wall Street... let's see how long you last and what quality of life you have.

My gripe is not with protesting or with standing up against greedy pieces of shit that break the law or take advantage of people. My gripe is with classifying everyone into one bunch. Most people involved with or running a public company are hard working Americans. There are bad people everywhere, but not all people are bad, even on Wall Street.

Mark Minervini

The C=L U=M Principle

2011-11-04T11:39:00.009-04:00

Most people like to stay within a range of relative comfort; a range that is self imposed. This is known as your comfort zone. For most of us, the grand majority of our experiences and daily life’s routines are within the limits of what we already know; the boundaries that we set, the fence that we build around us to feel safe.

We tend to ignore the outer limits of this circle of comfort almost all of the time. The unknown is a scary proposition for most. The CLUM principle simply states that COMFORTABLE = LESS OPPORTUNITY AND UNCOMFORTABLE = MORE OPPORTUNITY; C=L U=M

The simple fact is: opportunity is in the areas that few are willing to venture. In the circle of humanity, you’re part of the circle. And, in order for you to take advantage of inefficiencies in the so-called system, you must go outside the system. You must, at some point, be a lone wolf. This requires you to be a little different than the “norm.”

You will need to go beyond what you know the outcome is going to be. That’s right; you need take some risks and go outside your comfort zone. It won’t be easy, because most people will tell you you’re crazy or it can’t be done. However, you will likely notice that most of the people who try to discourage you are usually not very successful and the ones that encourage you are generally the more successful people.

Now if you want to be successful and achieve your dreams, this will require a new way of thinking that entertains the idea that we have a much greater capacity for living, for accomplishment and enjoyment; that we can enjoy things that may seem unenjoyable at first glance. And, that we have the capacity to stretch our comfort zone to new limits and dimensions.

When you stretch your comfort zone to a new limit, it never returns back to its old dimension; it becomes your new comfort zone, ready to challenge you to go beyond its limits or walls once again.

Like a game of golf; you’ll never shoot a perfect game of eighteen holes in one. However, you keep trying to improve and stretch your game to new limits and the game is always challenging.

Whenever you hit a limit, whenever you hit a wall or you feel nervous or scared in the face of a challenge or a new idea, view these situations or experiences in life as the chances that you’re given to succeed and reach your true potential. These are the times that you could look back on and say “that was my big break” or “that was when I should have done x”. It’s your choice.

These moments happen all through your life and give you a multitude of great opportunities to accomplish and to achieve your desires if you’re willing to take the risk of going beyond what you already know and try new things. It’s at those specific moments that you are asked to go beyond your limits and stretch your thinking that will, in the long run, define your success.

So, next time you’re faced with a tough decision or a challenge, look at it from a new perspective; tell yourself that this is one of those great moments that life is offering me; a chance to be all that I can be. This is one of the great gifts of life; the natural call to arms. It may not always work out, but these are the moments that offer you the opportunity to be different than most; to be a winner.

Mark Minervini

A Special Thanks to This Year's Master Trader Program Champions... Best Wishes and Happy Trading!

2011-10-18T16:15:00.009-04:00

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HOW LOW CAN THEY GO?

2011-10-03T09:06:00.009-04:00

“It would be simple to run down the list of hundreds of stocks which, in my time, have been considered gilt-edge investments, and which today are worth little or nothing. Thus, great investments tumble, and with them the fortunes of so-called conservative investors in the continuous distribution of wealth.”

-Jesse Livermore

Here’s a familiar refrain from some investors: “I don’t need to trade with a stop-loss because I only buy quality stocks.” Well, I have news for you; good companies can be terrible stock investments if bought at the wrong time. There’s no such thing as a “safe” stock. No stock can be put away and held forever. Most stocks can’t even be held unattended for even a few years.

Many so-called investment-grade companies today will face new challenges, business conditions, or regulatory changes that can materially impact future earnings potential. Often, before these new challenges or in many cases severe problems become apparent the price of the stock declines precipitously in anticipation of such developments.

And, don’t think for a minute that the company is going to let this type of information out easily. The company will try everything in its power legally, and in some cases illegally, to hide such problems or negative circumstances. (I can assure you that you won’t find this information in the annual report unless the company has no choice but to disclose it.)

Many “conservative investors” have gone broke owning and holding onto so-called blue chip companies with the philosophy of prudence by way of quality. If this happens to be your strategy, then I’m afraid you will eventually be in for a big surprise.

The lazy investor buys Coca Cola; he feels “safe” and smart that he bought quality. I can’t tell you how many times I heard the words: “They’re not going to go out of business, it’s Coke.” Maybe not, but the stock could at some point go down 60% or 70% and take a decade to recover!

Hey, wait a minute... that actually happened. Coke topped in 1973, declined 70% from its high, and then took 11 years just to get back to even. Sure, investors received a dividend of a few percent per year, but that doesn’t even beat inflation, and they were still sitting with a big loss. In 1998, Coca Cola topped again; the stock declined for 5 years and took an almost 50% haircut.

There are plenty of examples among “high quality” companies that had periods when their stock prices were decimated regardless of their status. After topping-out in 1973, it took Eastman Kodak 14 years to recover just to break even, this was just in time for the crash of 1987, which was followed by another 8 years of recovery back to its 1973 high. Twenty-two years to break even!

Xerox also topped in 1973 and took 24 years to break even; during the same period the S&P 500 Index advanced more than 500%. During the 1960s Avon Products became so popular that the stock price ran up way ahead of its earnings, resulting in a price advance that took the stock from $3 in 1958 to $140 per share in 1972; then the stock topped out and declined from $140 to $19, a decline of 86% in only one year. Fourteen years later the stock was still at $19 a share.

From December 1999 through February 2002, McDonalds fell 72% in just 32 months. From August of 2000, AT&T (the bellwether of all bellwethers) fell 85% in 50 months. A drubbing of that size requires a 566% gain just to get back to break even. How many stocks do you buy that go up 566%?

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From April 2000 Cisco Systems plunged 90% in 30 months, which requires a 900% gain to break even. And, then there was the institutional favorite Lucent Technologies, which fell 99% in 35 months from 2000 through 2003. In 2008, General Motors went to zero. How about AIG, Bear Stearns, Lehman, Enron or Worldcom?

Need I say more?

I could go on and on with countless examples, cycle after cycle. These are just a few of the market’s casualties, and the above mentioned were, at the time, all “high quality” names. Maybe someday we will be saying the same for stocks like Apple, Amazon, Priceline, Baidu or Green Mountain?

Mark Minervini

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New Bull Markets Thrive on New Leadership

2011-09-18T11:45:00.009-04:00

In the early stages of a market-bottom rally it's absolutely critical to focus on leading stocks if your goal is to latch onto big winners. Sometimes you will be early. Stick with a stop-loss discipline, and if the rally is for real, the majority of the leading stocks will hold up well and you will only have to make a few adjustments.

However, if you get stopped out repeatedly, you may be too early. If you get stopped out of a particular name, don't just walk away from the stock forever. Often, a stock will create a “shake-out,” and then consolidate or “tighten-up” and then re-emerge. As you see a growing number of stocks emerging on the heels of the first wave leaders, you will start to observe what sectors are leading the market’s advance. Let the stocks lead you to the sectors; the best names will almost always move before the underlying sector is hot.

Leading industry groups can emerge even while other stocks continue to make new lows during the initial upswing. As a general rule, I buy strength not weakness. True market leaders will always show improving relative strength, in particular during a market correction. You should update your watch list on a frequent basis, weeding out issues that give up too much price, while adding through forced displacement new potential buy candidates that show divergence and resilience.

As the overall market is bottoming, your watch list should multiply over a number of weeks. The better stocks start moving into new high ground as the market rallies off its lows. This is a good sign that the market has either bottomed or is getting close to a bottom. This is a critical juncture.

Each emerging bull market tends to send up its unique set of leaders. The leaders of the past bull market rarely lead the next rally, so expect to see some new and unfamiliar names. Healthy new bull markets give birth to new leaders. Remain vigilant and ready to act.

Mark Minervini

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SMALL SUCCESS LEADS TO BIG SUCCESS

2011-09-05T23:47:00.005-04:00

“I long to accomplish a great and noble task, but it is my chief duty to accomplish small tasks as if they were great and noble.” -Helen Keller

As a trader, I know the importance of pacing myself in order to attain the consistency and stamina I need to win over the long haul. Although the same basic fundamentals are always at work, they combine differently in each market and each cycle, and from time-to-time change their character in the interim.

In the early stages of a new cycle I look for new emerging themes that will form the basis of my approach to trading. Themes can be revealed in the way stock prices are acting in general, industry group leadership, and the kinds of economic and political factors the market chooses to react to or ignore; I try to set my pace accordingly, wagering conservatively with smaller than normal “pilot positions” and then pyramiding on small successes.

Only when my smaller pilot positions confirm my assumptions and show profits do I step up my trading size and rhythm. With this type of approach (pyramiding up), I need only one or two good quarters to rack up a really great year. Until the right opportunity emerges, I pay special attention to preservation of capital above capital appreciation. When a promising opportunity eventually presents itself, I’m ready to act swiftly and aggressively with the bulk of my capital intact.

Remember, the top three priorities in trading: First, is preservation of capital. Next is consistency in executing your plan. When you have these two things mastered, you can then pursue the third, which is superior performance.

I conduct intensive research to identify trading ideas and follow those ideas like a hawk. When the time comes to put money to work, the decision should be automatic and obvious. To trade with ease, you must trade when the conditions are favorable. Trading should be effortless. If your trading is causing you difficulty or stress, then something is wrong with your criteria or timing, or else you’re trading too large.

When the market is not acting great and there’s no clear market leadership (as is the case currently), it's best to stay in cash. If you choose to trade, play it small with pilot positions. This accomplishes two things: First, you will test the market and keep its pulse. Once you get a strong heartbeat, you can step it up. Second, you stay in trading shape.

Trading is just like working a muscle; if you don’t work it, it loses strength. Stay in trading shape by using pilot positions as “sparring partners.” However, don’t slug it out and get hurt with your sparring partner. Instead, wait for the main event and then give it your all to capture the championship belt.

Big success in the stock market is built on a series of smaller successes added together. Be patient and build on success, one trade at a time.

Mark Minervini

YOUR LIFE AND YOUR DREAMS - Words of Inspiration

2011-08-29T21:33:00.007-04:00

“Go confidently in the direction of your dreams. Live the life you’ve imagined.” -Henry David Thoreau

Fortunately for me, I discovered Henry David Thoreau’s poetic message early in life. I took his words as a personal challenge to pursue and achieve my own dreams.

There are many people willing to work a 60-hour week for a paycheck, building someone else’s dream, but they won’t work that hard to realize their own dreams. Most fear going outside their comfort zone or they can’t imagine giving up a steady paycheck. For many, there is a gap between where they are in their lives now and where they envision themselves to be. The life they’re living is not necessarily the life they long to have.

If this resonates with you, ask yourself a question: if you could do anything, would it be what you are doing now? Do you go to work each day to fulfill someone else’s dream, or are you working on the life that you truly desire?

Be honest.

If the answer is no, then you’re like most people who, somewhere along the line, bought into the concept that they had to settle for less than their dreams. It wasn’t always like that, though, was it? At some point, you had dreams and probably still do. Maybe you gave up on them, or scaled them back a bit, convincing yourself that you’re “comfortable” with the way things are.

Recognizing your dream, however, is just a first step. You can dream, you can think positively, you can plan and set goals, but unless you take action, nothing will materialize.

Many get into the trap of paralysis by analysis, searching for a certain degree of answers to gain a comfort level, but never initiate action. You will never have the confidence to feel “comfortable” until you truly get involved. Therefore, your initial step forward needs to be taken before you think you have all the answers.

This is true for trading as well as most things in life.

This may seem a little scary. However, each time you take action, you gain real experience —all of which creates momentum, opening your mind and freeing your creativity.

You can make excuses or you can make money, but you can’t make both.

Now get to work and start making millions!

Mark Minervini

Market Leaders; a Double Edge Sword - Part 2

2011-08-23T10:47:00.013-04:00

Make no mistake; investing in leading stocks is indeed very risky if timed incorrectly. Market leaders and high flyers are great when they’re going up; however, the downside can be disastrous if you lack an exit plan. Without a sensible plan to minimize losses, your odds for a major setback at some point are almost certain.

Just as market leaders are out front on the upside, they also tend to lead on the downside. The smart money that bought these stocks will take their profits and move out much quicker than they came in.

My own scientific evidence and anecdotal review over 30 years of personal trading concludes that the chances of a market leader giving back most or all of its gains are high. This is why you must have a plan to sell and nail down profits when you have them.

History shows that one-quarter to one-third of past market leaders give back all or more of their entire huge advance. On average, their subsequent price declines are 50% to 70% depending on the period measured.

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In a post- bubble-type market such as in 1929-1930s and in 2000-2003, many leading stocks declined as much as 80% to 90%. This is not the type of decline from which a stock investor can recover. Most don’t come back, ever! For those who do recover, it generally takes five years or even 10 years.

Big profits can be made during periods of optimism, even in stocks that virtually everyone is aware of. However, if you’re late to the party, look out below. The same stocks that had been going up for a period of one to three years or more could be due for a major correction.

For example, the Tech stocks that led the 1998-2000 bull market were the biggest losers during the 2000-2002 bear market, and recovered, at best, only about half of their losses during the entire 2003-2007 bull market. History is littered with examples that the leaders of one bull market are rarely leaders of the next.

Financials and housing stocks were market leaders during the 2003-2007 bull market and then took the biggest losses during the bear decline in 2008. Therefore, if history is any guide, the leaders of one cycle should generally be abandoned as buy candidates for both bear market recovery rallies as well as for the next bull market.

Though, there is a caveat to this rough rule of thumb: If the leadership stocks or sectors started to emerge late near the end of the bull market cycle that preceded the subsequent bear market, then in some cases, they can lead during the bull market.

Very often, leaders of the "next" bull market, emerge from the most unlikely areas, but quickly reveal themselves through the application of sound price and relative strength analysis techniques. Keep an eye out for those stocks that hold up the best during this bear market correction; they could be the next cycle’s bull market leaders.

Mark Minervini

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Market Leaders; a Double Edge Sword - Part 1

2011-08-23T10:13:00.020-04:00

Just as the leaders lead on the upside, they also lead on the downside. Why? After an extended rally or bull market, the market’s true leaders have already made their big moves. The smart money that moved into these stocks ahead of the curve will move out swiftly at the first hint of slowing slow. When the leading names in leading industry groups start to falter after an extended market run, this is a danger signal that should heighten your attention to the more specific signs of market trouble or possible trouble in a particular sector or industry group.

Most stocks experience a relatively severe decline in price after a phenomenal advance has run its course. This is normally due to profit-taking and the anticipation of slower growth ahead. A weakening general market is often the cause for subsequent price declines.

There will come a point when leading stocks stop making new highs, start to churn, or, even worse, buckle and reverse direction. This often happens before the overall market tops and gets into serious trouble. For example, in mid-1999, I started to point out the divergences and negative signals that specific stocks were flashing. At the time, some of the market’s key leaders were starting to top out, while the indexes continued to accelerate higher. For months I saw evidence that the ice was melting beneath the market, based on the action of leading stocks. Institutional clients kept asking me if I was sure about my opinion, because while the divergences were clear, the market averages kept powering upward. I was asked repeatedly, are you being too cautious?

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Bull markets sometimes roll over gradually whereas bottoms often end with a sudden sell-off, followed by a strong rally. As the leaders start to buckle, the indexes can move up farther or start to churn, moving sideways. That's because cash stays in the market and rotates into laggard stocks. The indexes hold up or even track higher on the backs of the stragglers. Watch out! When this happens the end is near and the really great opportunities may have already passed.

Most investors miss these subtle signs, mainly because they become conditioned by the market’s previous persistence upward during the bullish phases. What’s the big deal if a few stocks start to crack, they tell themselves, as long as the Dow keeps heading higher; Right?

A bull market is always dominated by at least one sector and several sub-sectors. Within the top sectors leading a new bull market, the relatively few leading names that dominate the leadership during a bull market eventually attracts the attention of institutional money. The excessive, concentrated buying enthusiasm for those leaders can push their prices far above realistic valuations. As a result, those same issues tend to decline the most during the subsequent bear market. For those investors who hold on to the former leaders for too long, the results can be devastating.

Mark Minervini

STAY TUNED FOR PART 2

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Risk Model Signals

2011-08-17T09:41:00.005-04:00

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!!! ATTENTION READERS !!!

My risk model readings and market opinion are now included in our subscription video product Minervini on the Market. We have had numerous requests for a product that delivers our research at a cost more affordable than our premium platform Minervini Private Access; we have priced the Minervini on the Market weekly market analysis video at an introductory price of $495 for an annual subscription (regular price will be $995 per year).

We are confident that Minervini on the Market will help you beat the market and achieve your financial goals. To be fair to our paying customers, we will no longer be reporting the risk model readings or my market commentary in real-time on the blog. I will however, continue to write short lessons and major market opinions on the blog as my schedule permits, so stay tuned.

Hope to see you each day in our real-time trading room at Minervini Private Access or each week at Minervini on the Market.

Mark Minervini

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!!! ATTENTION READERS !!!

2011-07-26T14:42:00.019-04:00

My risk model readings and market opinion are now included in our subscription video product Minervini on the Market. We have had numerous requests for a product that delivers our research at a cost more affordable than our premium platform Minervini Private Access; we have priced the Minervini on the Market weekly market analysis video at an introductory price of $495 for an annual subscription (regular price will be $995 per year).

We are confident that Minervini on the Market will help you beat the market and achieve your financial goals. To be fair to our paying customers, we will no longer be reporting the risk model readings or my market commentary in real-time on the blog. I will however, continue to write short lessons and major market opinions on the blog as my schedule permits, so stay tuned.

Hope to see you each day in our real-time trading room at Minervini Private Access or each week at Minervini on the Market.

Mark Minervini

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2011-07-25T01:44:00.003-04:00

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Risk Model Flashes Buy Signal

2011-07-01T09:23:00.012-04:00

MARKET COMMENTARY – Friday July 1, 2011 posted @ 9:38AM/ET

Over the past several weeks the market has moved from “oversold” to “overbought.” We know these to be risky words if taken too literally. The market’s overbought condition is certainly no secret; as a result, everyone seems to be expecting the market to falter soon.

In the short run, with the end of the quarter buying completed and the major averages moving back up to trend, this may turn out to be correct. However, in my experience, major declines often begin as oversold conditions and major advances begin overbought.

The market certainly could pull in here 2-3%; this is precisely what you should be gauging going forward; how the market holds up, but more importantly, how individual stocks hold up during an eventual pullback. We have no way of knowing for sure if the market correction is indeed over. We do however see some compelling evidence that a new uptrend may be underway.

The following suggest the correction we just experienced is within an on-going bull market and the best stocks have already made their lows:

• June 21, 23, 29 – the NYSE Composite displayed what we would characterize as important accumulation days with no distribution in between
• June 21, 23, 29, 30 – the NASDAQ Composite displayed what we would characterize as important accumulation days with only one distribution day occurring, which was questionable due to index rebalancing
• Recent stock breakouts occurring during the span of accumulation days have held up quite well
• June 30 – our risk model flashed a buy signal (As of Thursday, all four component models that make up our overall risk model moved to the buy side.)
• Our long-term general market work indicates the long-term trend is still in-tact and the fundamental backdrop remains bullish for stocks

We have scaled into stocks in the following manner:

• On June 22 – twenty-five stocks met our criteria and were moved to our Buy Alert list. We selectively added six names long to our MPA portfolio as initial "test the water" buys.
• June 28 – we added an additional five longs for a total of eleven positions. Our Buy List continued to expand.
• June 30 – we are long nineteen names in the MPA portfolio with thirty-five names on our Buy Alert list which were cumulatively added during the week.

Mark Minervini

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2011-06-27T00:45:00.003-04:00

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2011-06-26T00:38:00.004-04:00

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Market Commentary - June 21, 2011 posted @ 10:19PM/ET

2011-06-21T22:19:00.004-04:00

Tuesday the DJIA rallied 109 points adding to its four day winning streak. Ninety-two percent of the trading volume on the NASDAQ was on the upside; a good sign. The NASDAQ also flashed a follow-through day (FTD). Some are questioning the follow-through day’s validity because Monday’s below average volume made for an easy comparison.

IBD reported that follow-through days in June have had a poor record of success. According to IBD, in the past 10 years, June has delivered four follow-through days — 2001, 2006 and two in 2010. Every one of them failed. On May 31, the NASDAQ Composite flashed a follow-through day, but that too failed. If this rally is going to fail, it will likely do so within a week or two.

Tuesday’s market action was indeed encouraging; our watch list expanded and we are seeing some decent set-ups run up the right side. Our risk model improved but not enough to trigger an outright buy signal yet. We continue to advise a defensive posture. If you decide to trade this market, keep positions small and stops tight until we get confirmation that the market has indeed bottomed and stocks are poised to rise in earnest.

Keep in mind, circumstances could change very quickly. Remain vigilant and ready to move into the market should we get indications that the market has bottomed. The fundamental picture could improve depending on statements by the Fed Wednesday. Bullish sentiment has cooled off a bit while the NASDAQ Composite corrected 10%. If the picture continues to improve we will put on some positions to test the waters.

Mark Minervini

Market Commentary - posted June 16, 2011 @ 8:50AM/ET

2011-06-16T08:42:00.005-04:00

Yesterday the Dow gave back all the gains it made on Tuesday and them some losing 179 points on heavy NYSE volume. The NASDAQ Composite Index broke below its 200-day moving average on heavy volume as well. This is simply a continuation of the distribution that has been occurring over the past six weeks and highlights the present danger.

While the market continues to be oversold and as a result, a strong snap-back rally could occur at any time, the fact that the market continues to weaken and can’t rally much is reason for caution. While everyone seems to be focusing on the S&P 500 and NASDAQ Composite Indexes approaching their May lows, the Russell 2000 Index which is a broader and more reflective picture of the overall market has already undercut its May low.

In the near-term, we see additional downside risk that offsets the potential reward of a short-term snap-back rally that will occur at some point. Our risk model remains decidedly bearish on its May 5 sell signal (see past blog post on May 6, 2011).

Regardless of the chance for a rally from oversold levels, we continue to stay on the sideline waiting for risk to subside and stocks to offer proper low risk entry points.

Mark Minervini

Excerpt from note to clients June 14, 2011 @ 11:46AM/ET

2011-06-15T12:26:00.008-04:00

As discussed in recent days, the market is rallying from an oversold condition. If the market can hold its gains, we will then look for follow-through in the major averages and confirmation from individual names going forward. As a general rule of thumb, we DO NOT get aggressively long on the first up day after a correction. We may take a few positions to test the waters should stocks set-up properly. What we want to see to confirm the market has bottomed are the following:

1.A proliferation of constructive stock set-ups (an expanding Buy Alert list)
2.Successful breakouts occurring from stocks on our Watch & Buy Alert List (breakouts that hold up)
3.Accumulation in the major averages (FTD on the NYSE & NASDAQ)
4.Improvement in our risk model ranking (preferably, an outright buy signal)

Mark Minervini

"I attended Mark's seminar last year… It was a life changing seminar."

Pradeep Bonde
Founder of StockBee

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Risk Model Update - June 2, 2011

2011-06-02T00:23:00.003-04:00

Our risk model remains on its May 5, 2011 sell signal. Wednesday's abrupt sell-off highlights the volatility and risk currently present in the stock market. Our advice is to remain defensive until our risk model flashes the all clear signal.

Mark Minervini

Market Commentary - Posted Friday May 13, 2011 @ 2:09PM/EST

2011-05-13T13:54:00.013-04:00

While the Dow intraday is flirting with its recent pullback low, the broader NYSE Composite Index has already taken out its low. The recent 3-day "snap-back" rally was anemic and unimpressive. On May 5, 2011 our risk model moved to a sell signal. Until we see improved market action along with participation among leading names, we suggest the following steps:

10 Steps to Take to Reduce Portfolio Risk
1. Get off margin immediately
2. Raise at least 25-50% cash
3. If you choose to trade, take smaller than normal position sizes
4. Reduce overexposure in any one industry group and diversify more broadly
5. Reduce exposure to high beta stocks
6. Avoid laggard stocks (even if they look cheap)
7. Nail down profits when you have them (be less greedy)
8. Tighten up your stop-losses (be less forgiving)
9. Sell all stocks that break down in price (especially if they can’t rally)
10.Upgrade in quality and reduce exposure to low priced stocks

Mark Minervini

"I attended Mark's seminar last year… It was a life changing seminar."

Pradeep Bonde
Founder of StockBee

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Learn more at www.4traders.info

Meet 2010 Triple-Digit Challenge Winner Mark Ritchie

2011-05-12T14:02:00.000-04:00

Find out how Mark Ritchie of Chicago traded his personal account to a 100% gain in less than 6 months using the SEPA methodology he learned at last years Master Trader Program.

Attend the 2011 Master Trader Program and meet Mark Ritchie in person. In addition, meet special guest spekear Joe Fahmy. Learn how Joe uses the valuable knowledge he learned from Mark Minervini to consistently beat the market.

For more information and a schedule of events, go to www.4traders.info

Mark Ritchie II with Mark Minervini at the 2010 Master Trader Program

Stock Market Wizard and U.S. Investing Champion Mark Minervini announced the winner of his “Triple-Digit Challenge” a contest that started at the conclusion of Minervini’s 2010Master Trader Program in Myrtle Beach, South Carolina.

Minervini challenged conference attendees to produce a 100% return in their trading accounts within twelve months. “The first one of you that reaches this goal,” Minervini said, “will be welcomed as a guest in my home where you can trade side-by-side with me for a day. All expenses for the trip will be paid by me.”

Mark Ritchie from the Chicago area won the challenge utilizing the SEPA® techniques that Minervini taught in the two-day Master Trader Program. “What can I say, the guy is as good a teacher as he is a trader.” Ritchie said.

Ritchie turned his $25,000 trading account into more than $50,000 in just over five months. When asked how his trading ideas were generated Ritchie commented, “I used screens which I derived from information learned at Mark Minervini's Master Trader Program and on Minervini Private Access and Mark’s blog; such as earnings, relative strength, Mark's Trend Template and other techniques that Mark has disclosed."

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"I attended Mark's seminar last year… It was a life changing seminar."
Pradeep Bonde
Founder of StockBee

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IF YOU MISSED IT LAST YEAR, DON'T MAKE THE SAME MISTAKE THIS YEAR!

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2011-05-10T22:57:00.002-04:00

Risk Model Flashes Sell Signal - posted May 6, 2011 @ 9:00AM/EST

2011-05-06T00:25:00.024-04:00

As of the close Thursday May 5, 2011 our risk model moved to a sell signal. If you haven't already moved to cash or at the very least, lightened up your portfolio, we suggest that you take advantage of short-term market strength and do so immediately. The following are some suggestions for reducing risk exposure in your portfolio:

10 Steps to Take to Reduce Portfolio Risk
1. Get off margin immediately
2. Raise at least 25-50% cash
3. If you choose to trade, take smaller than normal position sizes
4. Reduce overexposure in any one industry group and diversify more broadly
5. Reduce exposure to high beta stocks
6. Avoid laggard stocks (even if they look cheap)
7. Nail down profits when you have them (be less greedy)
8. Tighten up your stop-losses (be less forgiving)
9. Sell all stocks that break down in price (especially if they can’t rally)
10.Upgrade in quality and reduce exposure to low priced stocks

Mark Minervini

"I attended Mark's seminar last year… It was a life changing seminar."

Pradeep Bonde
Founder of StockBee

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Learn more at www.4traders.info

Market Commentary - May 5, 2011 - posted @ 10:41AM/EST

2011-05-05T10:35:00.005-04:00

Even though our risk model has not yet flashed an outright sell signal, at this point, we are definitely in a wait and see mode going into next week. We did a little more selling today; currently we hold only 3 long positions. Although we never know for sure how the individual stocks and set-ups will dictate our eventual market position, it seems likely that we will be trading light for the next several days. Keep in mind, our basic philosophy or mantra could be summed up as: the market steers, we just row. Of course, the major market averages could experience a snap-back rally any day. However, with so many stocks showing recent weakness and increased volatility, we view the current environment as one that is becoming increasingly risky.

Mark Minervini

Risk Model Update - May 5, 2011

2011-05-05T00:22:00.006-04:00

On Tuesday our risk model moved from positive to neutral; the last buy signal was signaled on March 29, 2011. This week we aggressively reduced our exposure from 22 holdings to only 7 as of Wednesday. If the market weakens much further from current levels, we will likely be forced into a cash position.

Mark Minervini

Q&A Webinar Today @ 4:30PM/EST

2011-05-03T00:13:00.006-04:00

The free live question & answer session with Mark Minervini is today May 3 at 4:30PM/EST. See you there...

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Should you trust company management?

2011-04-26T13:48:00.003-04:00

While the quality of management is certainly important for the future prospects of a company, management’s ability to execute is very difficult to assess outside the actual results they produce—namely revenue, earnings per share, return on equity and margin improvement.

You should NOT buy a stock simply because it has great management. The question you should always ask is: If management is so great, then why aren’t they producing great results?

In all fairness, not even the most talented CEO or executive team can change or control an industry trend, a broad shift in the economy, or other forces that can impinge on a company’s P&L. These factors will hamper growth no matter who’s running the show. This is why you should always base your buy and sell decisions on actual reported results, and make sure the stock price action confirms those results.

A stock trading in a long-term downtrend, near it's 52-week low may be signaling trouble ahead. The price should show good relative price performance and be in a definite uptrend with good fundamentals. If the stock price does not confirm—if it is acting poorly or showing poor relative strength and abnormal activity relative to its reported results—this differential between technical price action and reported fundamental results should signal caution.

Often, it means something is wrong or perception has not yet changed to reflect the new set of circumstances. As a nimble investor, you can afford to wait for the perfect time as opposed to sitting with dead money hoping and wishing that management will pull off a miracle.

It’s simply unnecessary to play guessing games when there are so many profitable companies from which to choose.

The bottom line: Demand great results from great management.

Mark Minervini

Pradeep Bonde Interviews Mark Minervini

2011-04-20T15:10:00.007-04:00

My interview with Mark Minervini
Pradeep Bonde
www.StockBee.biz

1. You often say the individual investor/trader has a great advantage over the Professional manager. What gives the individual investor the edge?

The biggest advantage that the individual investor has is control. With today’s technology, most traders can have the same tools as a pro. However, the individual trader has a tremendous advantage over professionals like mutual fund managers, mainly because they have greater liquidity and speed. This enables the individual to be more concentrated in a smaller list of well-selected names at lower risk because the individual can utilize stop-loss protection with little or no slippage. The individual, with a faster response time, can be more patient and strike at only the most opportune moments, which is the best advantage of all.

In my opinion, the individual investor, using the proper method, should be able to beat the S&P 500 Index every single year regardless of the market environment. You’re not running a mutual fund that must own eighty or a hundred different names, so you don’t have to be overly diversified. Thus, you can avoid the pitfalls that lead to compromises in quality. You don’t always need to have market exposure either. You can move to cash at will.

As an individual investor, free of the oversight of boards and committees, you can decide when it’s time to enter or exit the market and do so quickly because of your relatively small size. Therefore, you can concentrate your capital in a handful of topnotch names that you follow very closely. When there is a change in the picture, you can move in an instant. Speed, liquidity and autonomy are major advantages.

2. What creates explosive performance? As someone who has has demonstrated explosive returns over a long period of time, what is the real secret of explosive gains year after year?

Not losing or I should say not losing big is the most important principle for winning big. If you get yourself in a hole, then all you do is spend your time digging out of that hole. I spend the grand majority of my time concerning myself with assessing and managing risk. If you expose yourself to good risk/reward situations, then the profits takes care of themselves.

Specifically, you should not risk more than you expect to gain on average; I call that the “Cardinal Sin.” If you’re averaging say 10% on your winners at a 50% batting average, then you obviously can’t take 10% losses or you will lose money. As obvious as that may seem, most traders hold losses beyond their average gain quite often. Incidentally, we are currently in the process of developing Minervini Analytics, an online suite of calculators and spreadsheets that will help investors track their results, conduct post-analysis, and asses and manage risk.

Even worse than letting losses get out of hand is throwing good money after bad, which is to add to a loser. You should never average losers. You should also understand that you’re not going to achieve huge returns consistently by being overly diversified; 4 or 5 names to as many as 8-12 should be enough diversification if you take acceptable risks and manage that risk. It’s better to have a small list of well selected stocks that you follow closely than it is to be spread out all over the place.

3. Stock selection is critical to success. How can investors do a better job of selecting the right stocks?

Stock selection is indeed critical; however, it’s not nearly as important as managing risk and making good risk/reward decisions. You can pick the best companies, but if you manage the trade poorly you will end up losing money. The real Achilles heel of the average investor is risk management. Traders who do well consistently and stand the test of time, are those who understand how to put their money in a good risk/reward position. They’re not concerned with winning all the time, rather making more on winners than they lose on situations that don’t work out.

Most investors miss the whole point of trading, which is to make a profit. Most investors are too concerned with Monday morning quarterbacking and pampering their egos than they are at actually making big returns. They constantly adjust their plan based on emotions and end up frustrated and confused. This stems from a lack of defining style and objectives.

You’re not going to get the high or the low, so stop kicking yourself. If you can make more than you risk consistently you will achieve great results. You can rarely trade perfectly, but you can perfectly execute your plan.

SWSH is a good example. I bought the stock on 3-31-11 and sold it 5 days later for a 24%profit. If I held another 9 days, I would have realized an 84% gain! The point is: I achieved my goal; I made a decent multiple of my risk. Of course, I’m always looking to improve my trading: however, if I achieve my goal and make a decent gain, I have no regrets. Ringing the register and avoiding losses is how you rack up big returns. Stock selection is important, but stock selection is the easiest part of the equation.

4. Entry and exit selection is critical to success. How can investors do better job of selecting the right entries and exits?

The only thing you have direct control over is when you buy, how much you buy, and when you sell. In order to make those decisions to the best of your ability, it’s critical that you know the truth about your trading. Study your past trades, in particular your mistakes. If you make an honest appraisal of your results, this will allow you to hone your timing. Look for common denominators in your trading; things you do over and over. Strengthen your weaknesses until you have no weaknesses. That’s how you become a champion in anything. Much of what you need to know is in the results you produce. I can look at 15 or 20 trades that a trader makes and tell you almost everything about them.

5. How can traders shorten their learning curve?

You can shorten your learning curve by exposing yourself to good information and maybe a good mentor. The problem is, good advice is hard to find. We try to help people shorten that curve through our Master Trader Program seminar and through our daily interaction on our Minervini Private Access platform. However, even getting great advice, the one thing you cannot shorten is your experience curve; it takes time to learn anything worthwhile.

It’s important that you specialize. I know of no one who, for example, can successfully trade value in one cycle, and then switch to growth the next, long-term investing, and then day trader. Find a style and stick with it, learning all that you can so that you are truly an expert at something. Specialize on a specific approach. Once you define your style and objectives, it becomes much easier to develop and stick to a strategy and your learning curve will then accelerate.

"I attended Mark's seminar last year… It was a life changing seminar."

Pradeep Bonde
Founder of StockBee

IF YOU MISSED IT IN 2010, DON'T MAKE THE SAME MISTAKE AGAIN! REGISTER TODAY FOR THE 2011MASTER TRADER PROGRAM WITH MARK MINERVINI

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Market Commentary - April 20, 2011 - Buy Signal Still Intact

2011-04-20T10:14:00.010-04:00

We remain on our March 29, 2011 buy signal. Over the past couple of days our risk model came close to switching to a sell. However, the leading stock component of the overall model held us in. On balance, our portfolio has held up relatively well; we are currently long 21 names with only one showing a loss from our purchase price. Today's rally is indeed impressive.

Going forward, we need to see continued improvement from recent levels in order to hold our bullish position. If the general market rally attempt fails and falls much further from here, it would likely move us to a defensive posture, particularly if our individual stock positions hit sell stops.

Mark Minervini

CAN A THOUSAND PhDs BE WRONG?

2011-04-18T09:41:00.005-04:00

“It seemed to me that most of what I was learning at Wharton could only help you fail in the investment business.” -Peter Lynch

They say if you torture numbers long enough, they will tell you anything you want to hear. I submit, if you studied the patterns of ants scurrying around long enough, you could surely find some correlation to timing the market! Of course, only a fool would risk his money on such a conclusion.

Mathematics and theories is seldom a match for experience and expertise. Nothing against professors and mathematicians, but in the stock market, the real world works quite differently than the textbooks.

Keep in mind that it was highly intelligent people who, for a long time, argued whether or not a baseball could really curve or if it is just an optical illusion. The argument was finally settled with the advent of fast photography. Using cameras, it was determined that, indeed, a curveball does curve. This of course came as no surprise to the pro ball players who stood in the batter’s box over home plate and had to face a major league pitcher day after day.

Those who think they have it all figured out on paper can blow themselves to smithereens in the market. Strategies that are back-tested utilize curve fitting to find the best formula that beats the market, but only in hindsight. Don’t be too impressed with what looks good on paper until you can verify it with your own trading in the real world.

The futility of trying to forecast markets with static statistical models has not prevented armies of the greatest minds from trying to invent the next mathematical money-making machine.

But why do so many fail?

The reason is the human element. People learn and people change, and it is people who make buy and sell decisions. Do you think a computer could be programmed to drive a race car and beat NASCAR’s Jimmy Johnson, given all the nuances of a race that require split-second decision making? Sure, his racing team utilizes technology to figure out the best aerodynamic design and how to optimize engine and tire performance, but Jimmy is still at the wheel.

Or what about a 747 with all its advanced computer power in the cockpit? Even so, autopilot is only used mid-air, never on takeoffs and landings, which are the most challenging parts of flying. When it comes to the market, science and technology can be deployed to analyze data and point you in the right direction. Trading, however, is not purely science; it’s also an art.

In the late 1990s, Long Term Capital Management found out the hard way that educational pedigree and mathematical genius (even with a Nobel Prize) is no match for the market—demonstrating that theories and the real world can decouple in a very ugly way. Throw in some mammoth-sized egos, and you have the makings of a financial tsunami.

Long Term Capital’s brainpower claimed that the fund was perfectly hedged. In other words, they thought they had figured out a way to beat the market and truly believed nothing could go wrong. Unfortunately; they did not expect the unexpected, which at some point always happens in the market. When dealing with probabilities, the devil is in the details—or should I say in the tails, meaning the outliers.

In the case of Long Term Capital, the unexpected was Russia’s default on its domestic debt. This had never happened before and, therefore, was thought to be impossible. What was touted as perfectly hedged began to unravel to the tune of $1 trillion in exposure, and leverage that was rumored to be as much as 100-to-1. The Federal Reserve had to step in to save the day.

Long Term Capital Management (LTCM) was managed by a team of some of the brightest financial minds in the industry. In the end, you would have gotten better results investing in T-Bills or even throwing darts.

No one likes to be wrong, but in trading and in life, everyone is wrong at least some of the time. Some people are unwilling to face that fundamental fact of life. In the stock market, those who can't admit mistakes end up going broke.

Marilyn vos Savant, a national columnist and author, earned a listing in the Guinness Book of Records for five years for having the highest IQ for both childhood and adult scores. Marilyn is perhaps best remembered for a brain teaser she published in her column in Parade magazine. The puzzle was based on the game show “Let’s Make a Deal,” hosted by Monty Hall, and therefore became known as Monty Hall Theory.

In short, the scenario presented three closed doors. Behind two are goats, and behind one is a new car. Monty Hall knows what’s behind each of the doors but you—the contestant—do not. Let’s say, you pick Door Number 3. Monty Hall opens Door Number 2, revealing a goat. Now there are two doors left: 1 and 3. One has a goat and one has a new car. When Monty Hall asks if you want to change your door selection, do the odds favor you making a new selection?

Most people would say, no. They think, at the outset, the odds were 1-in-3. Now, the odds are 1-in-2, or 50%. Wrong! As Marilyn wrote, the odds are actually 2-in-3, or 66% if you change doors. Her explanation was based on six games that exhaust all the possibilities. Switching resulted in winning two-thirds of the time, and losing one-third of the time.

What was most interesting about Marilyn’s exercise was the outrage that it provoked. She received more than 10,000 responses from people telling her she was completely wrong (she wasn’t, and proved it)¬—including 1,000 responses from PhDs. How could so many smart people be wrong about a math equation? I mean, math is math.

This plays out countless times in the market. Many people (even highly intelligent individuals) overlook the obvious. As Sam L. Savage points out in The Flaw of Averages “A degree in physics might help you understand how a wing generates lift, but it won’t necessarily make you a good pilot.”

Many of the books out there on stock trading and investing are written by intelligent authors; however, many of them either don’t trade for a living or have never experienced really big success in their own trading account.

The stock market does not care how educated you are or whether you have a PhD. In the stock market, we all go back to kindergarten and have to learn and earn our way to the top.

Mark Minervini

"I attended Mark's seminar last year… It was a life changing seminar."

Pradeep Bonde
Founder of StockBee

Click on Image to Enlarge

Learn more at www.4traders.info

2011 Master Trading Program

2011-04-15T11:45:00.027-04:00

"I attended Mark's seminar last year… It was a life changing seminar."

Pradeep Bonde
Founder of StockBee

Click on Image to Enlarge

Learn more at www.4traders.info

AVOID RANDOMNESS

2011-04-13T15:06:00.009-04:00

There are literally thousands of companies listed on the New York Stock Exchange or the NASDAQ. Of all these names, only a portion is followed closely by analysts. Typically the larger, well-known companies are more efficiently priced. Newer and smaller companies do not have much analyst coverage.

In order to attract Wall Street’s attention, they have to grow and prove themselves. Until that happens to the point of being quite obvious to most investors, there are price inefficiencies all the time, every day—I know, I have been successfully trading them for several decades.

Contrary to some popular theories, not all information is baked into a stock’s price, especially when you are dealing with the smaller, under-followed companies. Thus, there are situations when stocks are inefficiently priced, which often lead to great investment opportunities. The key is to avoid randomness.

A relatively unknown company’s growth prospects and earnings potential are under the market’s broad radar until it explodes onto the scene and begins attracting widespread attention. In the interim, you, the individual investor, have the potential to position yourself and reap large returns as the next big stock winner makes its move.

Regardless of how many academicians claim the stock market is fully efficient, the facts are it is not. Inefficiencies in pricing abound because information is not fully disseminated and digested on every publicly traded company. I would even offer my own track record as proof of the market’s inefficiencies, which create investment opportunities when lesser-known stock candidates are discovered ahead of the pack.

Those who subscribe to the flawed efficient-market hypothesis might imply or suggest that my success as a trader is the result of luck. During my 28-year career as a stock trader, I have made tens of thousands of trades. Could someone be lucky so many times? What are the odds of having such a lucky run?

I’m not the only one: many stock investors and traders have consistently produced stellar performances because they acquired a unique skill that few are willing to work to posses. Mark Ritchie of Chicago won my “Triple-Digit Challenge” and turned his $25,000 trading account into more than $50,000 in just over five months. Two days later, Matt Glascoff from Connecticut crossed the 100% finish line. Matt traded his $850,000 account to a triple-digit gain in just over 5-months (Read blog “We Have a Winner” http://is.gd/FRT5Fj).

The really big opportunities in the stock market are generally in the smaller, underfollowed and undiscovered companies. 95% of the biggest stock market winners in history had relatively small floats. Believe it or not, at one time, very few investors heard of Wal-Mart, Dell Computer, Cisco Systems, Research in Motion, Starbucks, E-Bay, Amazon or Yahoo just to name a few.

Success in the stock market comes from having a set of sound rules to guide you; rules that work, and then having the courage and discipline to follow those rules. One of those rules should be to avoid randomness.

Mark Minervini

CLICK ON IMAGES TO ENLARGE

2011 Master Trader Program Scheduled

2011-04-10T19:56:00.047-04:00

Click On Image to Enlarge
Click On Image to Enlarge

!!!CONTEST WINNER!!!
Mark Ritchie Wins Minervini's Triple-Digit Challenge

Stock Market Wizard and U.S. Investing Champion Mark Minervini announced the winner of his “Triple-Digit Challenge” a contest that started at the conclusion of Minervini’s 2010 Master Trader Program in Myrtle Beach, South Carolina.

Minervini challenged conference attendees to produce a 100% return in their trading accounts within twelve months. “The first one of you that reaches this goal,” Minervini said, “will be welcomed as a guest in my home where you can trade side-by-side with me for a day. All expenses for the trip will be paid by me.”

Mark Ritchie from the Chicago area won the challenge utilizing the SEPA® techniques that Minervini taught in the two-day Master Trader Program. “What can I say, the guy is as good a teacher as he is a trader.” Ritchie said.

Ritchie turned his $25,000 trading account into more than $50,000 in just over five months. When asked how his trading ideas were generated Ritchie commented, “I used screens which I derived from information learned at Mark Minervini's Master Trader Program and on Minervini Private Access and Mark’s blog; such as earnings, relative strength, Mark's Trend Template and other techniques that Mark has disclosed."

Mark Ritchie II with Mark Minervini

There’s more...

Just two days after confirming Mark Ritchie’s results, a second Master Trader Program alumnus reached the 100% mark. Matt G from Connecticut traded his $850,000 account to a triple-digit gain.

Matt G with Mark Minervini

The next Master Trading Program will be held October 15-16, 2011 at the Myrtle Beach Marriott Resort & Spa at Grande Dunes in Myrtle Beach, South Carolina. Reservations are being accepted at www.4traders.info. Seating is very limited.

Click On Image to Enlarge

WINNER MARK RITCHIE'S STATS AND COMMENTS

Name: Mark Ritchie
Account Size: $25,000
Period: October 20, 2010 – April 4, 2011
Use of leverage: Yes, as much as standard Reg-T margin would allow for, roughly 2:1
# stocks traded: 139
Position Sizing: Aprox. 25%
Net reward/risk ratio: 2.42:1
% Trades Profitable: 43%
Quotes: Interactive Brokers, TradeStation
News: Interactive Brokers, Marketwatch.com, Yahoo Finance

Click to enlarge image

How trading ideas were generated:

Used basic screens which I derived from information learned from Mark Minervini's Master Trader Program, at Minervini Private Access, and Mark’s blog; earnings, RS, Mark's Trend Template and things he has discussed at length.

Technical entry criteria:

Only entered if I had a visual stop on the chart I was comfortable with, the smaller the better, usually in the mid single digits, would look for charts with tightness on the right side with accompanying patterns discussed at Master Trader Program and in his workbook, i.e. cup w/ handles, power plays, 3C's and the like. Once I had determined tradable pivots I would enter upon subsequent breakouts.

Fundamental criteria:

Tried to look for stocks with best earnings, although good technicals would sometimes override fundamental criteria, but basically companies with accelerating earnings and sales, usually 25% or higher

Criteria for taking profits:

This was the toughest part but usually looked at current gain to average gain and where the chart looked at a given period, i.e. if the stock was above my average gain and looked extended I would look to take profits, I would often take profits into weakness when stocks would take out previous significant lows on their respective charts. I also used some of the moving average rules discussed for selling in the Master Trader Program workbook.

Criteria for loss protection:

Get out quickly whenever the stock hit my predetermined loss point, usually the point at which the chart started to break down. When the stock hit my pre-determined loss point I would get out ASAP!

Additional comments:

In short I can say that all the performance is a function of what I learned at the Master Trader Program with the exception of the money management portion, as I have always traded strictly based on the #'s of my own trading, avg. W/L, win rate, etc. So once I became more & more comfortable that I could maintain an edge that was mathematically deserving of a 25% position size I started trading larger and more aggressive. That said on the money management side all of the stock specific criteria as far as fundamental and technical selection I would say came purely from Mark's teaching. I should also add that in no way do I feel that this period was some of my best trading as I made many mistakes and I believe that I am capable of much better overall trading the more I continue to put into practice what I've learned. There's not much else to add other than the guy is as good a teacher as he is a trader!

!!! WE HAVE A WINNER !!!

2011-04-05T14:42:00.034-04:00

Mark Ritchie II has won Mark Minervini’s Triple-Digit Challenge.

At the conclusion of the 2010 Master Trader Program, Mark Minervini threw down the gauntlet and challenged his attendees. He said: “Every one of you in this room here today now has the tools to produce a 100% return in your trading accounts within 12-months. The first one of you that reaches this goal can be a guest in my home and come and trade side-by-side with me for a day. All expenses for the trip will be paid by me.”

Mark Ritchie II from the Chicago area conquered the challenge. Utilizing the SEPA® techniques he learned during the 2-day Master Trader Program last October, Mark turned his $25,000 trading account into more than $50,000 in just 5-months.

Mark Ritchie II with Mark Minervini

Wait, there’s more!!!

Two days after we confirmed Mark Ritchie’s results, a second Master Trader Program alumnus reached the 100% mark; Matt G of Connecticut traded his $850,000 account to a triple-digit gain.

Matt G with Mark Minervini

CONGRATULATIONS TO THE BOTH OF YOU…

GREAT JOB!

WINNER MARK RITCHIE'S STATS AND COMMENTS

Name: Mark Ritchie II
Account Size: $25,000
Period: October 20, 2010 – April 4, 2011
Use of leverage: Yes, as much as standard Reg-T margin would allow for, roughly 2:1
# stocks traded: 139
Position Sizing: Aprox. 25%
Net reward/risk ratio: 2.42:1
% Trades Profitable: 43%
Quotes: Interactive Brokers, TradeStation
News: Interactive Brokers, Marketwatch.com, Yahoo Finance

Click to enlarge image

How trading ideas were generated:

Used basic screens which I derived from information learned from Mark Minervini's Master Trader Program, at Minervini Private Access, and Mark’s blog; earnings, RS, Mark's Trend Template and things he has discussed at length.

Technical entry criteria:

Only entered if I had a visual stop on the chart I was comfortable with, the smaller the better, usually in the mid single digits, would look for charts with tightness on the right side with accompanying patterns discussed at Master Trader Program and in his workbook, i.e. cup w/ handles, power plays, 3C's and the like. Once I had determined tradable pivots I would enter upon subsequent breakouts.

Fundamental criteria:

Tried to look for stocks with best earnings, although good technicals would sometimes override fundamental criteria, but basically companies with accelerating earnings and sales, usually 25% or higher

Criteria for taking profits:

This was the toughest part but usually looked at current gain to average gain and where the chart looked at a given period, i.e. if the stock was above my average gain and looked extended I would look to take profits, I would often take profits into weakness when stocks would take out previous significant lows on their respective charts. I also used some of the moving average rules discussed for selling in the Master Trader Program workbook.

Criteria for loss protection:

Get out quickly whenever the stock hit my predetermined loss point, usually the point at which the chart started to break down. When the stock hit my pre-determined loss point I would get out ASAP!

Additional comments:

In short I can say that all the performance is a function of what I learned at the Master Trader Program with the exception of the money management portion, as I have always traded strictly based on the #'s of my own trading, avg. W/L, win rate, etc. So once I became more & more comfortable that I could maintain an edge that was mathematically deserving of a 25% position size I started trading larger and more aggressive. That said on the money management side all of the stock specific criteria as far as fundamental and technical selection I would say came purely from Mark's teaching. I should also add that in no way do I feel that this period was some of my best trading as I made many mistakes and I believe that I am capable of much better overall trading the more I continue to put into practice what I've learned. There's not much else to add other than the guy is as good a teacher as he is a trader!

March 29, 2011 - Market Risk Model Flashes Buy Signal

2011-03-29T22:16:00.007-04:00

Tuesday the up/down volume component of our risk model turned positive. This was enough to move the risk model to an outright buy signal.

Tuesday, we added CMG, DEPO and VG to our MPA portfolio. We are currently long 20 stocks. Notable breakouts from our buy alert list included: SOHU, OVTI and OTEX.

With our market risk model now on a buy signal, our work suggests that market pullbacks will likely be limited to 2-3% over the near-term.

Mark Minervini

Market Commentary – March 27, 2011 – posted Sunday at 11:50PM/EST

2011-03-27T19:43:00.008-04:00

Although it has improved considerably, our risk model has not yet flashed an outright buy signal. We did, however, find enough SEPA® set-ups to venture into the market with some smaller than normal positions. Last week we added 14 new long positions to our MPA portfolio. Currently, the portfolio is long: AIRM, ALU, CVI, ENSG, FMCN, JCP, LNN, MTZ, RCII, RNOW, SIMG, TSCO, URI, WD, WTW and WWWW. We also added 34 stocks to our buy alert list.

The market has rallied nicely over the past seven days. If the market has indeed bottomed, a low single-digit pullback in the major averages would likely set-up pivot buy points in additional names. A continued move higher with no pullback would breakout stocks that are currently set-up. On the other hand, an ominous development would occur if this market comes in and recent stock breakouts fail and breakdown.

Semantics aside, we added some of the best names to our portfolio and buy list, if they hold up and additional set-ups proliferate, we’ll buy more. Although we do have our concerns, personal opinions have little value to us. The verdict of the market always dictates our ultimate course of action.

Right now, our toe is in the water.

Mark Minervini

Market Commentary – March 25, 2011 – posted @ 12:15AM/EST

2011-03-25T00:08:00.006-04:00

Thursday’s market action was a step in the right direction. Signs of accumulation on the NASDAQ Composite Index along with a handful of constructive breakouts were enough to improve our risk model.

Although Thursday’s action did NOT move the risk model to an outright buy signal, of the 28 stocks on our Buy Alert list, notable breakouts included: LXU, OPEN, OVTI, SINA and TRN.

Over the past couple of days, we added some new long positions to our MPA portfolio. Stocks currently in the portfolio include: ALU, CVI, FMCN, LNN, MTZ, RCII, SIMG, TSCO, WTW & WWWW. Position sizing is smaller than normal.

If we see additional constructive action and further improvement in our risk model, we will then bump our exposure level and add additional names. Until then, we are playing small ball with one foot by the door.

Mark Minervini

Market Commentary - March 23, 2011 - posted @ 10:11AM/EST

2011-03-23T10:07:00.008-04:00

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Our risk model remains on its February 22 sell signal. Problematic areas include negative volume characteristics in the major market averages, diminished leadership, a lack of sound SEPA® set-ups, and complacency among advisors.

The Investor's Intelligence sentiment figures were released today. The bulls moved down slightly to 50.6% from 52.2% the prior week. There was only a fractional change for the bears. They edged up ever so slightly to 22.4% from 22.3% last week. Both readings are still relatively negative for stock prices.

It seems investors are more worried about missing a rally than they are about losing money. This sort of thinking is more indicative of a top, not a bottom.

Although our work suggests we are only in a correction within an on-going bull market, we remain cautious until we see improvement in the above mentioned areas, namely our risk model.

Mark Minervini

Market Commentary – Sunday March 13, 2011 – posted @ 7:28PM/EST

2011-03-13T19:27:00.006-04:00

Over the past three weeks, the major market indices have come under some obvious selling pressure. Distribution can most readily be seen in the NASDAQ Composite Index as well as in some key market leaders. Beneath the surface, stocks have been rolling over since November. The percentage of NASDAQ stocks trading above their 50-day moving averages have steadily decreased as the market rallied.

Our risk model moved to sell on February 22, 2011.

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As I recently pointed out, diminishing leadership, distribution in the major averages, and divergent behavior in individual names gives us reason for concern here.

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In addition, sentiment remains too bullish. Considering the market’s recent action, bullishness among investment advisers is, in our opinion, relatively high and bearishness is low. The Investor’s Intelligence figures as well as other sentiment polls we track suggest the market is vulnerable. We would like to see some of this bullishness worked off as the market corrects.

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Our long-term model is supported by momentum and strong underlying fundamentals. While underlying fundamentals remain positive for stocks, there are a few areas of concern with regard to the potential for economic pressure. One such risk is the possibility of higher oil prices.

If oil supply disruptions spread beyond Libya, it would likely reduce expectations of earnings growth and have an effect on growth in the U.S. economy and some global economies. Higher crude oil prices much above current levels would not be good for stocks. At current levels, this is a minor negative. However, for every $5 or $10 that crude oil rises above $120 -$130 per barrel, the negative effects will grow exponentially.

Click on image to enlarge

Currently, we are in cash. As long as underlying fundamentals remain relatively in-tact, our work suggests that we are in the midst of a correction within an on-going bull market. Our current guesstimate calls for a possible 8-13% correction off the high on the major market indexes such as the NASDAQ Composite. Stocks that hold up well during a market pullback should be catalogued as potential buy candidates going forward.

Could the market abruptly come roaring back to the races? Absolutely. However, right now we view volatility just as dangerous as declining prices.

Our current advice is to remain defensive until we see improved sentiment, reestablished stock leadership and constructive price and volume action in the major averages. Refer to our 10 steps to take to lessen portfolio risk listed below.

Mark Minervini

10 steps to take to lessen portfolio risk

How should you brace yourself for volatile times or worse, a market correction? Other than the obvious answer of going to 100% cash, here are a few suggestions for reducing risk exposure in your portfolio during a volatile or corrective market environment:

1. Get off margin immediately
2. Raise at least 25-50% cash
3. If you choose to trade, take smaller than normal position sizes
4. Reduce overexposure in any one industry group and diversify more broadly
5. Reduce exposure to high beta stocks
6. Avoid laggard stocks (even if they look cheap)
7. Nail down profits when you have them (be less greedy)
8. Tighten up your stop-losses (be less forgiving)
9. Sell all stocks that break down in price (especially if they can’t rally)
10. Upgrade in quality and reduce exposure to low priced stocks

Minervini Private Access

2011 Master Trader Program

2011-03-12T13:13:00.004-05:00

Last year's Master Trading Program was a great success! This summer, we're doing it again!

DON'T MISS IT! TWO DAYS personal training in a small group setting with Stock Market Wizard & U.S. Investing Champion Mark Minervini.

ADD YOUR NAME TO THE INTEREST LIST TODAY... By adding your name to the list you will lock up your seat at no obligation. This is offered on a first come first basis. SEATING IS VERY LIMITED.

You can e-mail us at minervinipa@gmail.com

Please include your name, e-mail address, City and State (or Country) that you will be traveling from.

Date and location to be announced SOON...

For more information go to: www.minervini.com

Market Commentary – March 10, 2011 – posted @ 10:00PM/EST

2011-03-10T21:50:00.016-05:00

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Click on image to enlarge

Our risk model flashed a sell signal on February 22. This was due to several factors including:

• Diminishing leadership
• Distribution in the major averages
• Divergent behavior in individual names

As I stated in my past commentary:“Historically we have not made much progress on the long side during periods when the risk model was on a sell.”

Thursday the Dow declined 228.48 and volume swelled on both the NASDAQ and NYSE exchanges. This is obviously a negative sign and it confirms our recent warning signs.

The question now is will the market fall further, and by how much?

Our work currently suggests that we are in the midst of a correction within an on-going bull market as opposed to the start of a new bear market. Our long-term model is supported by momentum and strong underlying fundamentals. We view this decline as likely rotational, and would recommend focusing on those names that hold up well during this pullback as possible buy candidates going forward.

Our market opinion remains unchanged. Until we see improved leadership and constructive price and volume action in the major averages, remain defensive.

We think a likely scenario is a correction of 8-10% on the NASDAQ Composite Index with an outside chance of an undercut of the November low as a worst-case scenario. An undercut of the recent low around 2,676 seems almost certain.

Mark Minervini

For more information go to: www.minervini.com

“The whole idea of having a strategy is to filter out meaningless noise and boil down data points to the information that actually tells you something important and useful” -Mark Minervini

Market Commentary - posted Sunday March 6, 2010 @ 11:39PM/EST

2011-03-06T16:27:00.020-05:00

Our risk model remains on its February 22 sell signal. With the exception of a small position in JDSU, we are currently in cash. Historically we have not made much progress on the long side during periods when the risk model was on a sell. Thursday's rally did improve the risk model, but not enough to move it to an outright buy signal.

Currently, we view our latest sell signal as an indication of a possible correction within the context of a bull market. At current interest rate levels, we see downside limited to 8-12% in the major averages. Our long-term work still suggests a bullish bias with momentum and underlying fundamentals still favoring the bulls.

Additionally, we see breakdowns in leading names somewhat contained and more industry group specific versus an overall market epidemic. In the near-term, if the market holds up we may put on a few longs to test the waters. The key here is to stay sidelined or trade small until we get confirmation that longs are indeed working.

As always, markets can change with little notice. We stand ready to reverse course quickly if our work suggest near-term risk has subsided. Until then, we remain cautious.

Mark Minervini

!!! NOW OPEN !!! Master Trading Program 2011 Interest List

2011-03-03T22:51:00.002-05:00

Join our Team of Champions Today!

2011-03-03T11:26:00.002-05:00

Click on Image to Enlarge

Market Commentary – Posted Wednesday, March 2, 2011 @ 10:11AM/EST

2011-03-02T10:09:00.001-05:00

In addition to the high volume declines that occurred on February 22 and February 23, yesterday's (March 1) sell-off on increased volume was an additional indication pointing to distribution in the major averages. This is clearly a negative sign, particularly when it occurs during a period when SEPA® stock set-ups are scarce, as is the current scenario.

On February 23, 2011 we moved to a 100% cash position and continue to remain in cash as of today. If you have not already moved to cash or at least taken steps to partially protect your portfolio, we suggest using today’s short-term strength as an opportunity to sell or lessen exposure. We also suggest the following steps:

10 STEPS TO TAKE TO LESSEN RISK

Suggestions for reducing risk exposure in your portfolio during a volatile or corrective market environment:

1. Get off margin immediately
2. Raise at least 25-50% cash
3. If you choose to trade, take smaller than normal position sizes
4. Reduce overexposure in any one industry group and diversify more broadly
5. Reduce exposure to high beta stocks
6. Avoid laggard stocks (even if they look cheap)
7. Nail down profits when you have them (be less greedy)
8. Tighten up your stop-losses (be less forgiving)
9. Sell all stocks that break down in price (especially if they can’t rally)
10. Upgrade in quality and reduce exposure to low priced stocks

Mark Minervini

!!! NOW OPEN !!! Master Trading Program 2011 Interest List

2011-02-25T13:13:00.012-05:00

Market Commentary - posted Wednesday February 23, 2011 @ 11:35PM/EST

2011-02-23T23:32:00.001-05:00

Over the past two days we liquidated our stock positions and moved to a 100% cash position. On Tuesday February 22, 2011, our risk model moved to a sell signal.

With monetary conditions and long-term momentum still providing a bullish backdrop for the overall market, it's certainly possible that the major averages could snap right back as they have done on many occasions in the recent past; no one knows. What we do know is that our risk model is rolling over, and even more ominous is simply the fact that stocks are not acting very well. Our recent efforts in the market have produced a lower than average percentage of trades profitable as well as a smaller than average gain on our winning trades. This in itself gives us reason for concern.

As I’ve recently stated, the reward to aggravation ratio is less than favorable. For the time being we are taking a wait and see approach to see how Mid-East tension plays out.

-Mark Minervini

!!! Risk Model Flashes Sell Signal !!!

2011-02-23T09:52:00.002-05:00

As of the close Tuesday February 22, 2011, our risk model moved from buy to a sell signal.

!!! FREE WEBINAR !!! with Mark Minervini - Learn Mark's Top 20 Trading Rules

2011-02-09T10:14:00.002-05:00

Click on image to enlarge

LIMITED TO 500 SEATS - REGISTER TODAY!
Register at:
www.register4mark.blogspot.com

Market Commentary - Tuesday - February 8, 2011 - posted @ 12:45PM/EST

2011-02-08T12:40:00.004-05:00

On the heels of our Risk Model buy signal, we recently added 15 new names long to our portfolio.

We will be closely monitoring market action in the coming days to determine the “quality” of our recent Risk Model buy signal. So far, breakouts and pivot buy points, although mildly positive on balance, have produced mixed results. For this reason, our leading stock component of the risk model remains at neutral.

Recent action among leading names have been fairly constructive however, the ability for our current holdings to follow-through as well as the proliferation of new stock set-ups is important for an environment conducive to making worthwhile gains going forward.

As a bull market ages, trading can become more and more difficult as many stock set-ups become obvious and widely followed. The market averages however, can move higher even on the back of less and less names.

Recently, big cap stocks have come into vogue. We gauge quality in terms of the relatively strongest stocks with the strongest earnings, not necessarily the biggest names. A narrow rally that pushes the popular indexes higher can easily put pressure on the stock trader and force one to chase performance; this can often lead to a comprise in quality.

During my 28 years as a stock trader, I have learned to beware not of the up or down markets, but the whipsaw markets and the difficult trading environments. I have learned to beware of the markets in which I had to stretch the rules.

It is during difficult and challenging times which determine whether you're a champion trader or just a turkey able to fly only because a strong wind has temporarily filled your wings. Longevity is the key, and the key to longevity is to remain disciplined and wait for your "pitch" to come across the plate.

Style drift rarely pays in the long run. Stay focused on doing what you do best. Always remember, when you have a sound plan, in time, it will be your time.

Mark Minervini

Risk Model Update

2011-02-07T09:50:00.001-05:00

Our Risk Model has moved from sell back to buy

!!! FREE WEBINAR !!! with Mark Minervini - Learn Mark's Top 20 Trading Rules

2011-02-03T00:23:00.002-05:00

Click on image to enlarge

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Register at:
www.register4mark.blogspot.com

Market Commentary - January 31, 2011 - posted @ 12:52AM/EST

2011-01-30T22:41:00.010-05:00

On January 20th, 2011 our risk model moved to a sell signal. With the exception of one long position (Oracle-ORCL), we recently moved to the sidelines into the safe harbor of cash. Although we are currently prepared for the worst in a fully defensive posture, at this point, we do not expect the start of a bear market but rather a correction within a bull market. We do however; see a fair degree of immediate risk. Our work suggests that the major market indexes could fall as much as 8-10% from their absolute peaks, with the Russell 2000 Index most likely to be hit the hardest.

While we may indeed participate in some select short opportunities over the coming days, we generally reserve heavy exposure to the short side for bear market environments. Conversely, our long-term view remains bullish. The long-term trend as well as the underlying fundamental backdrop still supports our long-term bullish opinion. The immediate situation however, is that our risk model turned bearish and market leadership has broken down.

High relative strength stocks and smaller caps names came under significant selling pressure in recent weeks. While a flight to quality into some of the big cap names provided some additional upside and short- term relative strength for the Dow, the underlying current of the broad market shifted in favor of negative price action among many names.

While we never know how far the market or any particular stock will rise or fall, we can gauge risk factors and position our portfolio to be in sync with a probable outcome. Currently, probability favors risk over reward in the near term. At the very least, market volatility is likely to increase over the coming days. For the most part, we are taking a wait and see approach.

Bottom line: With the recent breakdown in leading names, our risk model negative, signs of distribution in the major averages as well as geo political unrest in Egypt, it seems clear that the reward to aggravation ratio is indeed low right now.

Mark Minervini

___________________________________________________

10 Steps to take to lessen portfolio risk (originally posted on January 21, 2011)

Suggestions for reducing risk exposure in your portfolio during a volatile or corrective market environment:

1. Get off margin immediately
2. Raise at least 25-50% cash
3. If you choose to trade, take smaller than normal position sizes
4. Reduce overexposure in any one industry group and diversify more broadly
5. Reduce exposure to high beta stocks
6. Avoid laggard stocks (even if they look cheap)
7. Nail down profits when you have them (be less greedy)
8. Tighten up your stop-losses (be less forgiving)
9. Sell all stocks that break down in price (especially if they can’t rally)
10. Upgrade in quality and reduce exposure to low priced stocks

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2011-01-25T12:24:00.002-05:00

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10 Steps to take to lessen portfolio risk

2011-01-21T14:41:00.004-05:00

How should you brace yourself for volatile times or worse, a market correction; what exactly does taking a defensive posture mean?

Other than the obvious answer of going to 100% cash, here are a few suggestions for reducing risk exposure in your portfolio during a volatile or corrective market environment:

1. Get off margin immediately
2. Raise at least 25-50% cash
3. If you choose to trade, take smaller than normal position sizes
4. Reduce overexposure in any one industry group and diversify more broadly
5. Reduce exposure to high beta stocks
6. Avoid laggard stocks (even if they look cheap)
7. Nail down profits when you have them (be less greedy)
8. Tighten up your stop-losses (be less forgiving)
9. Sell all stocks that break down in price (especially if they can’t rally)
10. Upgrade in quality and reduce exposure to low priced stocks

-Mark Minervini

Market Risk Model Flashes Sell

2011-01-21T00:11:00.002-05:00

Thursday’s market action moved our risk model to a sell signal. We now recommend a defensive posture for the time being.

Mark Minervini
January 21, 2011 @ 12:15AM/EST

Market Commentary – Thursday January 20, 2011 – posted @ 9:20AM/EST

2011-01-20T09:17:00.001-05:00

In my January 4, 2011 Market Commentary, I pointed to signs of divergence in some of the market’s key leaders. At the time, these divergences were significant enough to move our leading stock portion of our risk model to neutral from positive. While this did not move the risk model to an outright sell, it certainly heightened our awareness for additional signs of internal fragmenting among leading names.

Wednesday’s market action contained enough set-up failures to move the leading stock portion of our risk model to a current reading of negative from neutral. An even more obvious clue of faltering leadership was F5 Network’s price response to earnings announced after Wednesday’s close; the stock traded down more than 20% in afterhours trading. The weakness in FFIV caused a spillover of selling in other leading names, specifically cloud computing and related stocks such as VMW, CRM, ARUN, AKAM, APKT, RDWR, RVBD, JNPR and NTAP; they were all down in extended trading.

Like many names that have led this market, F5 Networks had formed a number of price consolidations along the way during its price advance; the most recent was clearly late stage. As we have pointed out in recent weeks, many leading stocks have emerged from late stage bases. Although our risk model has not yet flashed a sell signal, it’s important to keep a close watch on leading stocks and the stocks in your own portfolio. Market and sector weakness will generally show up in individual names first.

We continue to see more and more evidence that the start of a market correction may be underway or near. At the very least, we see it becoming increasing more difficult to make money in the market over the near-term.

To reiterate our recent advice: take smaller than normal positions, tighten stops, and nail down profits when you have them. Most importantly, religiously cut your losses on the names that move against you in order to protect yourself.

Mark Minervini

Market Commentary – Wednesday January 19, 2011 – posted @ 2:30PM/EST

2011-01-19T13:30:00.003-05:00

We have increased the turnover rate in our portfolio considerably over the past several weeks. This is due mainly to a switch from holding stocks through natural pullbacks in an effort to realize larger gains, to a more conservative approach of nailing down profits when we have them.

As I’ve discussed in recent market commentary, we see signs of a rotation into larger cap names and also into some of the laggard stocks. This is a clear indication of late stage market action. While we don’t see an end of the bull market on the horizon over the near term, a 4-8% correction (give or take a few percent) is likely looming. We have recently added some short positions to the portfolio to partially offset risk from our long exposure. Additionally, we have shifted to a tighter than normal loss cutting policy, giving stocks in our portfolio little room to move against us.

The market may indeed keep crawling its way higher however, if the rally contains less and less participation, it will become increasing more difficult to make money. Therefore, our recommendation is to take smaller than normal positions, tighten stops, and nail down profits when you have them.

Mark Minervini

Market Commentary – January 18, 2011 – posted @ 12:30AM/EST

2011-01-18T00:11:00.006-05:00

Last week’s market action was constructive; the market once again was able to produce a list of buyable breakouts after a brief pullback. During the week, we added a handful of names and ramped up the portfolio from 12 stock positions to 29. We added 17 new names which included 2 short positions.

The engine behind this bull market are low interest rates driven by economic weakness. Bull markets are born out of recessions and this one is no different than many past bulls.

Despite recent relative strength in home building stocks, the housing market is still depressed as there remains an oversupply of homes as well as an abundant supply of foreclosures. Commodity prices are on the rise again however, core inflation and wage inflation remain weak. The employment picture has not yet improved enough to allow the Fed to normalize rates. Therefore, the proverbial punchbowl remains on the table with additional re-fills likely.

Bottom line: There is little competition for stocks.

The Fed’s commitment to stimulus is likely to persist throughout 2011. The extension of the Bush tax cuts and the 2% cut in the employee payroll tax rate and a 2-year extension of depreciation incentives for business investment is also a form of stimulus. The above coincides with a favorable election cycle period and a market that is trading at a reasonable multiple when the current interest rate environement in considered.

Certainly, the fundamental tailwinds remain strong. More importantly, our longs continue to work and the market refuses to give up much ground. Therefore, we continue to stick with our plan and add new names as they emerge on a stock-by-stock basis.

The big question is: how far out is the market looking forward and when will it cease discounting the positive side of the coin? The answer: no one knows. This is why regardless of how great all the rhetoric sounds, we adhere to strategy.

To put it in simple terms, all the statistics, analysts’ opinions and pundit predictions on Wall Street won’t change the fact that we sell our stocks when they stop us out and we stop buying stocks when they cease to set-up constructively. In my 30 years as a stock trader, I have learned that this is by far more important than opinions and forcasts, including mine.

Until then, we continue to trade the best SEPA® situations as we remain on a buy signal, and the party continues.

Mark Minervini

Market Commentary - January 10, 2011 - posted at 11:00AM/EST

2011-01-10T10:54:00.001-05:00

The long-term fundamental backdrop as well as the the technical picture still supports our long-term bullish case however, as mentioned in my January 4, 2011 market commentary, "the short-term picture is looking less and less appealing." Since then, the Russell 2000 has pulled back a modest 2.8% off its high and it looks as if there could be some additional downside before any significant progress is made on the upside.

If our caution proves to be warranted and the market does correct over the coming days and weeks ahead, our work suggests the pullback will be relatively small and contained within the 4-7% range (give or take a percentage or two) on the major averages. The broader indexes such as the Russell 2000 will most likely be hit the hardest, as we have pointed out the recent relative outperformance in many of the bigger cap names.

Over the past two weeks we have sold and paired back many of our portfolio holdings. Over the short-term, we feel most stocks need to correct, or at the very least, consolidate. This does NOT however, mean that we will completely abstain from adding new longs to the portfolio on a select basis.

There is always the possibility that the market turns up and moves right back into new high ground even without broad participation. It is precisely for that reason we stick with our investment theme until proven wrong and let the market itself guide us as opposed to rigidly clinging to personal opinions or theories.

If the overall market is going to get into serious trouble, our stop-loss protection will force us to the sidelines one stock at a time. Currently, our risk model remains on a buy however; it is teetering on an intermediate-term sell. Short-term caution is our stance de jour.

-Mark Minervini

Market Commentary - posted January 4, 2011 @ 11:43AM/EST

2011-01-04T11:34:00.004-05:00

While the underlying fundamental backdrop as well as the long-term technical picture still remains quite positive for the stock market has a whole, the short-term picture is looking less and less appealing as the market moves up on the backs of second tier market movers. Over the past 4-6 weeks the market’s rally has produced subtle signs of divergence as some key market leaders including BIDU, CMG, FFIV, NFLX, CRM, PCLN, DECK, AAP and AKAM to name a few, have not participated in earnest.

We note recent relative strength in some of the larger cap, relatively low RS stocks such as IBM, PCS, QCOM, F, CSX, VZ, DIS, etc. as evidence of rotation. While we currently own some of these larger cap names in an attempt to profit from the rotational nature of the market, we would prefer to see the original market leaders continue to lead, which to us, would be a better indication of overall market heath.

For the above stated reasons we are downgrading the Leading Stock portion of our risk model to neutral from positive. This does NOT yet put us on an outright sell signal or indicate that I think we're starting a bear market; but rather, it’s a heads up as we point out rotation and the increased possibility of a market pullback. It certainly heightens our awareness to be on the lookout for additional signs of internal fragmenting among leading names and even more obvious signs of distribution in the major averages.

Of course, the market has moved up quite a bit and most market participants seem to be pretty bullish these days. A pullback in the market would be normal however, we treat every market pullback and signs of weakness as potentially threatening and always entertain the fact that every 10-15% decline starts as a 2-3% pullback, just as every 25-30% bear market begins as only a 10% decline. One never knows for sure how far the market will drop or rally. This is why we have stop losses and why we adhere to strategy.

If we should get additional strength in the market going forward in the coming days and weeks ahead, it makes sense to take that opportunity to nail down some profits in those stocks that are extended in price. Conversely, as always, cut your losses on those situations that move against you.

Mark Minervini

Mark Minervini Interview with Charles Kirk of The Kirk Report

2010-12-27T15:23:00.016-05:00

This interview was originally published on December 17, 2010 at thekirkreport.com

Charles Kirk: It is with tremendous pleasure that I offer my last interview of 2010 with Mark Minervini.

As with many traders I interview, Mark requires no introduction as he is one of the most highly-respected independent traders of our generation. His blog in recent years has instantly become one of the “must reads” out there as he often shares market commentary and analysis which shows why the respect so many have for Mark is so well-deserved.

Moreover, his experience and past history of savvy market calls is legendary. It is with little doubt that we can all learn a lot from him! We hope you enjoy and find this focus interview helpful in your own journey toward more success in the markets.

Kirk: Hi, Mark. First of all, thank you for taking the time to answer our questions. I speak for many members who have a great deal of respect for you and we sincerely welcome you to this interview series.

Mark Minervini: You do a great job, Charles, and I’m honored to be a part of it.

Kirk: Please tell us a little bit about how you got interested and started in trading.

Mark Minervini: I dropped out of school in the eighth grade in pursuit of a career as a drummer. From the money I made working as musician, I bought my first stock in 1983, which was a few hundred shares of Allis Chalmer. Shortly after, I read Richard Love’s book, Superperformance Stocks: An Investment Strategy for the Individual Investor Based on the 4-Year Political Cycle. Everything I’ve created with regard to my trading approach since stems from Love’s initial impression on me, specifically from his writings in chapter 7.

Kirk: What was one of the most important lessons you learned early on?

Mark Minervini: That no one was going to do it for me; no one was going to make me rich except me. I learned that you must take responsibility for your results in the market and in life if you want to be exceptional. Secondly, I learned that in order to do well in the market you must be consistent; consistency is what separates the pro form the amateur. In order to have consistent success, risk must be managed in relation to potential reward as standard operating procedure. You’re not going to make just one trade, rather hundreds or even thousands of trades; it’s all about how much you make on average versus how much you lose on average over time. Lastly, I realized that I simply had to get to the bottom of what actually worked in the marketplace and ignore all the opinions and theories.

Kirk: Was there anyone out there who helped you greatly during your initial learning curve? If so, what did you learn most from them?

Mark Minervini: My Mother and my Father. I learned it was ok to do what I love; to go after my dream. I also learned it was ok to be unconventional. I was given the room to be creative. My parents trusted me. I always knew I was supported emotionally. Financially, we were poor but my parents supported my dreams.

Kirk: Indeed, it is so important to have a strong support structure in place. In a nutshell how do you currently approach the market and what is your primary trading strategy?

Mark Minervini: I approach the market from a risk first approach. My trading strategy is called Specific Entry Point Analysis or SEPA. We look to enter trades at low risk entry points relative to potential reward. Primary focus is not to lose money. Secondary focus is not to lose money. And, the final focus is to make more on average than I lose.

Kirk: You remind me of Buffett who said he had only two rules: 1) Never lose money and 2) see rule number 1! What do you see as the primary benefits from employing a strategy that focuses on both fundamentals and technicals?

Mark Minervini: The benefits are having all the pertinent information that is consistent with big winning stocks. We know what to look for both fundamentally and technically. I have seen stocks bought on pure technicals and the guy buying the stock doesn’t even know that there was a cash offer or a proposed merger right at the price he paid. Refusing to look at fundamentals or any information that gives you an edge is usually because the individual just doesn’t know how to use the info, or has some bias based on personal opinion or tradition.

Kirk: Why is this kind of trading best for you and, more importantly, why do you think it works so well?

Mark Minervini: My strategy works well because it’s my strategy. I know the strengths and, more importantly, the weaknesses of what it is I do. It also works well because I allow it to work and stick with it even when it runs into difficult times. Nothing works well if you keep changing your approach. To be a master you must be a specialist, not a jack of all trades.

Kirk: What do you trade mostly? Equities, options, futures, ETFs, currencies, etc.?

Mark Minervini: Only equities.

Kirk: In an average week how many trades do you make? What is your average hold time and how many positions do you have open at any given time?

Mark Minervini: During an average year I may make 400-500 trades. About half of that turnover is a result of taking small losses, which I’m out of pretty quickly.

Kirk: What would you say are your primary strengths and weaknesses as a trader?

Mark Minervini: Discipline is my primary strength. And the willingness to admit when I’m wrong and move on. My weakness is I usually sell early and often leave money on the table. But I don’t really view that as a weakness, just something that could be improved upon. When you move in size you have to get out when the getting is good.

Kirk: In my experience it is often better to sell too early than too late Mark! How have you learned to mitigate your weaknesses and focus more on your strengths?

Mark Minervini: By not focusing too much on my strengths. If you’re good at buying and bad at selling I would focus on selling; if you improve your selling you will have a complete game. Focus on making your weaknesses strengths and then you will have no weaknesses. Exploit your strengths and improve your weaknesses.

Kirk: What have been some of the most challenging lessons you have learned?

Mark Minervini: That you can’t be everything. You must commit to a strategy and sacrifice other strategies. The problem with the market is it’s like playing poker however; you always get to see the next cards even though the hand is over. You always see what would have happened. This is very difficult to deal with for many people. To be successful, you have to understand that trading is NOT about picking highs and lows, it’s about making money.

Kirk: Very good. What are some of the key rules that you consider before selecting any potential trading opportunity?

Mark Minervini: How much am I risking is the very first concern. Also, does the stock meet all the necessary criteria? If the risk is acceptable and all the entry criteria are met, I enter the trade.

Kirk: What would you say is your average win: loss ratio for your trades?

Mark Minervini: I average 2 to 1.

Kirk: How has your overall performance been recently, as well as over the past few years?

Mark Minervini: It’s been about the same as always. I’m a consistent 2:1 trader.

Kirk: What would you say are your favorite kinds of technical and fundamental set-ups?

Mark Minervini: The ideal set-up is a stock emerging from a constructive consolidation with strong accelerating earnings and sales.

Kirk: Can you give us a recent example of a set-up you found to be very attractive and worked well in this market?

Mark Minervini: CML. Bought it on 11/24. Sold it on 12/7 for a quick profit.

Kirk: Have you noticed any trading set-ups more prone to failure than they have been in the past?

Mark Minervini: No. Not much has changed. Contrary to what many believe, it’s not different this time. LOL

Kirk: To help us understand your trading approach, can you talk about a recent successful trade from start to finish?

Mark Minervini: LULU. Supported by excellent fundamentals, the stock emerged from a double bottom pattern that formed from 4/15 – 11/04. I bought the stock on 11/05 the day the market topped just before a pullback of about 5% in the major averages. The stock was held through that market pullback because it acted normal and held above our stop. This gave me the conviction to add to the position as it emerged through its next buy point in November. I sold the stock (most likely too early) on 12/09 when they reported earnings up about +50% from the initial purchase from about a month earlier.

Kirk: Now please tell us about a recent unsuccessful trade.

Mark Minervini: Shorted GMCR; shorted the rally in October and November after the big break on SEC news. Stock rallied and stopped us out

Kirk: One of the things I most appreciate about you is how much you stress proper risk management. If we can, let’s talk a little bit about position sizing. Can you provide an example of a recent trade and explain your method for determining the size relative to your own trading portfolio?

Mark Minervini: I want to own as much as I can but generally no more than 25% of my portfolio (as liquidity permits). You are not going to make huge returns being too diversified. However, I only risk what I can get out of safely based on liquidity.

Kirk: That’s interesting. I think many would be surprised at the idea of having any position anywhere near 25% of an entire portfolio. Besides over diversification and liquidity concerns, what common mistakes do you think many traders make concerning position sizing?

Mark Minervini: They don’t know what an optimal position size should be based on their own risk/reward and risk tolerance. For instance, if you’re a 2:1 trader, your optimal position size is 25%.

Kirk: Ok. I think I understand what you mean, but please explain this position sizing formula more in detail so others can perhaps apply it in their own trading. Can you offer another example?

Mark Minervini: Ok. First, it’s important to understand that you are not going to achieve huge returns consistently being overly diversified or by relying on diversification for protection. You will only get a smoothing effect. When you own a bunch of stocks you end up with two problems: the first being that you just can’t watch and know all you need to know about each of them. The second problem is that you will have a difficult time getting fully invested quickly when opportunity presents itself and more importantly, getting liquid if you need to raise cash in a hurry. In addition, the math just doesn’t support it. Depending on the size and risk tolerance of your portfolio you should typically have between 4 or 8 stocks and for large portfolios maybe up to as many as 10 or 12 stocks. This would provide sufficient diversification but not too much. The Optimal-f formula can act as a starting place for you to understand optimal position sizing based on expectation. If Ken Heebner of CGM Funds can move around billions of dollars in just twenty names and still manage to beat the market, then a personal portfolio can surely manage sufficiently with 4-5 or 10-12 stocks. If you lose 5-6% on average and even if your position size is at 25% exposure, you’re still only be risking about 1.25% of your capital per trade. Of course, if you don’t have an edge, then you will lose no matter what your position sizing is.

Kirk: Good, that’s helpful. So, do you use and set stops, Mark? If so, what’s your stop loss method?

Mark Minervini: I always know where I’m going to get out of a trade before I get in. I aim to lose no more than 5-6% on average over time on my losers.

Kirk: Do you ever average down into a losing trade?

Mark Minervini: There’s a reason Paul Tudor Jones had a sign posted on his wall that read “Losers average losers,” and that reason is because it’s true. I almost always only add to a position if it proves itself and then I may add to my position at a higher price, not lower.

Kirk: Do you scale up and into winning positions? If so, how do you know when to increase a position size relative to your overall portfolio?

Mark Minervini: Yes. I generally move money into the better performing names at subsequent pivot points or set-ups.

Kirk: All good traders dedicate a lot of time and effort to improvement and reducing mistakes. How has your trading method evolved and improved over the years?

Mark Minervini: It just becomes more and more crystallized because I continue to focus on the same timeless principles, which allows me to become more and more of a specialist. The power of a narrow focus is amazing. The key is to be a real pro at something. Know all you can about a style or a tactic. Then you can build on that foundation. Traders give up too easily and jump around too much when things get difficult. How good do you think Kobe Bryant would be if while he was developing his skills growing up every time he had a really tough game he changed to a different sport or played a different position?

Kirk: I couldn’t agree with you more Mark. I see this problem among many. Can you provide an example of something you thought was true when trading early in your career and now believe is just completely wrong?

Mark Minervini: Yeah, everything. But I learned very quickly sound principles. It just took me many years to master the application.

Kirk: Why do you think most traders fail?

Mark Minervini: Here are 6 reasons:

1. Poor selection criteria; usually based on personal opinion, theory or tips and bad advice
2. They don’t stick to and commit to an approach; style drift
3. Don’t cut losses (#1 mistake made by virtually all investors)
4. Don’t know the truth about their trading – they fail to conduct in-depth post analysis
5. Treat trading as a hobby not a business
6. Want too much too fast; learning a skill takes time

Kirk: Please describe a typical trading day for you. How do you organize and dedicate your time?

Mark Minervini: Most of my work is done the night before. I already know what I’m going to trade before the open. I watch the market all day long, never leaving my desk for more than a few minutes during trading hours.

Kirk: How much time and attention do you pay to others’ opinions about the market and/or stocks you are trading?

Mark Minervini: Zero. I avoid outside opinions like the plague!

Kirk: Are there any tricks of the trade that you use to help maintain a consistent successful approach over a long period of time?

Mark Minervini: Yeah, long hours, hard work, a sound approach and discipline. There are no tricks or big secrets. Again, is there a secret to having a good basketball shot? It starts with a good coach, proper practice, plenty of hard work, discipline and sacrifice.

Kirk: Amen. However, most traders I know have a set of rules that they have learned from past mistakes. What are a few of yours that you think most traders would benefit from?

Mark Minervini: Hard work alone won’t cut if you don’t have a sound approach and if you’re not doing the right things. You must be facing west if you’re looking for a sun set. Approach each trade from risk first; ask how much can I lose. Don’t risk more than you can expect to gain on average. Know the truth about your trading; study your results carefully. Never average down. Always cut your losses; keep your losses small. These are fundamental rules that should never be compromised.

Kirk: I suspect like all good traders you are working on improving your performance in some manner. Can you share what you’re specifically working on right now?

Mark Minervini: Sticking to the rules. Always making sure we stick to the rules. We have a great approach, I don’t like to get to tricky and over complicate something that requires a straight forward approach.

Kirk: You’ve been trading for some time now. What would you say are the biggest changes in the markets and trading in general you’ve seen during your career, both good and bad?

Mark Minervini: The order handling rule change in 1997 has changed the way stocks move short-term because Market Makers don’t really keep inventory anymore. It’s a topic that would require a lengthy discussion; maybe we could talk about it another time. Other than that, not much has changed except more information moves faster than before.

Kirk: What advice would you give a person just now beginning to trade the markets?

Mark Minervini: Find a good mentor. Commit to a strategy. Cut your losses. Tune out the media. Take full responsibility for your results.
Kirk: What do you think are the greatest misconceptions beginning traders have about trading the markets and about trading systems?

Mark Minervini: Way too many to mention. Just about everything a beginner thinks is a misconception.

Kirk: A number of people who read my website desire to trade for a living and I receive a lot of questions concerning capital requirements needed to start and how to make the transition to trade full-time. Do you have any words of wisdom or rules of thumb to share along these lines?

Mark Minervini: I started with a very small sum of money and turned it into a fortune. Capital is not the challenge. Mastering yourself is the challenge. Discipline is the challenge. Persistence is the challenge.

Kirk: Do you think trading for a living is getting more difficult or easier for the average individual investor? Why?

Mark Minervini: Much easier. Tools for pros and amateurs are virtually identical. The pro has no edge. The individual has the advantage. No real liquidity concerns for the small trader versus the big fund manager. It’s a fantastic time to be a stock trader!

Kirk: When all is said and done, in your experience, what is the best way to learn how to trade?

Mark Minervini: Trade. As Ralph Waldo Emerson said: “Do the thing and you shall have the power.” And then conduct post analysis. Learn to be objective. You could try and find a mentor. However, the chances of getting great advice are slim at best. Trading is just like any other profession, there are only a handful of really outstanding practitioners.

Kirk: Do you have any books, websites, etc. that you highly recommend beyond your own website?

Mark Minervini: The Kirk Report. Why is there anything else? LOL!!!

Kirk: You are too kind Mark. Although I know both of us share a love for the markets and trading, what are your long-term career plans and future for your website?

Mark Minervini: I honestly don’t know for sure. My long-term plans are too stay healthy and be a good father to my daughter. This past year I started a pilot training program. Also, we now offer my research to the individual investor not just exclusively to the institution anymore. It feels good to help others achieve their goals. I think I may continue to develop that. Why hog all the good trades for myself? LOL!

Kirk: What are some of your personal passions beyond the market?

Mark Minervini: I’ve been a drummer since I was 6 years old and I continue to play. I play tennis, train boxing and lift weights to stay in shape, and I play an occasional round of golf.

Kirk: Finally, if you had only one piece of advice to share with all traders, what would it be?

Mark Minervini: Believe in yourself and never give up. Persistence is more important than knowledge. Make an unconditional commitment to trading and you will not fail.

Kirk: Thank you so much Mark. I really enjoyed this interview and I’m sure others will find it helpful.

Market Commentary - December 13, 2010 posted @ 12:20AM/EST

2010-12-10T13:34:00.015-05:00

On November 10, 2010 our risk model flashed a new buy signal. Based on our work, we see limited downside before the market moves even higher. Many have pointed to the Investor’s Intelligence percentage of bulls (most recent reading at 56.2%) as an indication of excess bullishness. While the facts are not conclusive, they are interesting to note:

• In 2003, Investor Intelligence percentage of bulls hit 60%.
• Bullish sentiment moved to 60% in December 2004; the market had close to three more years of bull market.
• The bulls hit 60% in December 2005—the bull market lasted another 2-3/4 years. In the past, there have been occasions when the market has been able to move meaningfully higher even in the face of a relatively high number of bulls. During some periods when monetary conditions were favorable for stocks, a higher level of bullishness was required to be considered excessive versus a hostile monetary environment. Currently, the monetary environment is clearly on the side of the bulls.

Over the past several weeks, many names have enjoyed bullish breakouts as stocks in general have moved up considerably. We have enjoyed some very nice profits during the recent rally and continue to hold a relatively high number of stocks in the MPA portfolio.

While a pullback is certainly possible on any given day or week, our work suggest that reactions should be normal and limited to 2-3% in the major average before this rally continues higher.

Mark Minervini

Follow-up Market Commentary – December 1, 2010 posted @ 11:07PM/EST

2010-12-01T23:02:00.003-05:00

And the verdict is in: NO OFFICIAL FOLLOW-THROUGH DAY (FTD).

The FTD has become a hot topic; something that many investors track and trust as an indication that the overall market (as represented by the major market averages) has bottomed. We too track accumulation and distribution in the major averages and the FTD plays a role in our own risk model and market opinion.

As I pointed out in my most recent commentary (earlier today):

“Even in the absence of a Follow-through Day (FTD) in the major averages, our Risk Model flashed a buy signal as of yesterday's close… We have been witnessing underlying strength in individual names for days. Going into today (Wednesday), we were already significantly invested in 24 names. With many stock set-ups working recently and the Risk Model on buy, it looks as if a FTD is imminent. Today’s market action and how we close will be interesting as well as important to watch.”

The market ended up closing strong however; volume fell short; clearly not enough to produce a valid FTD. I am encouraged however, by the above average volume on the NYSE and the NASDAQ Composite Indexes. Most encouraging has been the price action of individual names and that of the Russell 2000 and Value Line (geometric) Indexes.

If this market has indeed bottomed, a valid FTD will present itself relatively soon. Of course, it is not only possible that, in the absence of a FTD the market could reverse course and head back down, but this can and often does happen even after a FTD occurs. The key is to track how stocks in general behave, and if there is distribution in the face of what appears to be accumulation in the major averages around the time leaders are emerging.

Even after a FTD, it’s important to watch for distribution in the days going forward; distribution right on the heels of a FTD is a very negative sign. The coming days will be important to watch as we learn whether or not our pre-FTD entry turns out to be a blessing or a trap.

As always, we will maintain stop-loss levels and let the action of our portfolio be the final judge.

We are currently long the following 26 stocks: AIMC, ALSK, ARLP, CML, CLF, CPY, CSTR, DXPE, FELE, H, JCP, KNOL, LFUS, LULU, M, NEWP, NNBR, PKOH, QCOM, ROLL, SBGI, SNCR, TDSC, TWIN, TZOO and WYNN.

Mark Minervini

Market Commentary - December 1, 2010 posted @ 10:26AM/EST

2010-12-01T10:24:00.002-05:00

Even in the absence of a Follow-through Day (FTD) in the major averages, our Risk Model flashed a buy signal as of yesterday's close. Some point to the unemployment report as the catalyst for the market gap today. We have been witnessing underlying strength in individual names for days.

Going into today, we were already significantly invested in 24 names. With many stock set-ups working recently and the Risk Model on buy, it looks as if a FTD is imminent. Today’s market action and how we close will be interesting as well as important to watch.

Current long positions include: AIMC, ARLP, CML, CLF, CPY, CSTR, DXPE, FELE, H, JCP, KNOL, LFUS, LULU, M, NEWP, NNBR, PKOH, QCOM, ROLL, SBGI, SNCR, TDSC, TWIN, TZOO and WYNN.

We have NO short positions.

Mark Minervini

Market Commentary – Sunday November 14, 2010 posted @ 9:39PM/EST

2010-11-14T21:37:00.003-05:00

Recently there has been some distribution in the major market averages as well as some high volume selling on Friday in a few leading names such as AAPL, GOOG & AMZN. As I recently commented, it would be normal for the major market averages to come in 4-6% or perhaps even a little bit more given the extent of the recent rally. As always, it’s important to stay focused on your stocks and stick to your stop-losses religiously; if the market gets into trouble you will be forced into cash as your stocks stop you out one-by-one.

It’s also important not to try to predict. Short-term pullbacks during a market’s primary uptrend DO NOT nessesarily take all stocks down to the point they stop you out. The best names will maintain constructive base building, form a proper pivot point and emerge as the market comes off of its lows once a correction has run its course. Be ready to act swiftly. It’s during short and intermediate-term pullbacks when you can readily see the next round of market leaders forming the basis for what will ignite their advance.

While the market has certainly come a long way and is entitled to at least some pullback to digest its phenomenal run, this is an obvious observation that is highlighted by virtually every market pundit. At this point however, it makes sense to downshift into neutral for a week or two to see how this market pullback plays out.

We have recently added some short positions to take advantage of potential short-term market weakness however, we continue to hold longs that act well and trade above their protective stops.

Mark Minervini

Market Commentary – November 4, 2010 posted @ 10:30PM/EST

2010-11-04T22:27:00.006-04:00

We have enjoyed considerable success with our SEPA® trading strategy since re-entering the market on September 2, 2010. Although the market has come a long way and many stocks have emerged and advanced considerably, we believe more profits are forthcoming as the market is now flashing a long-term buy signal based on our work.

In my October 8, 2010 commentary, I warned that attempts to sell overbought conditions as a trading strategy can be risky business. Since then, short sellers have learned this lesson the hard way. Most traders that expected an “overdue” pullback since mid-September have been confounded as the market has marched considerably higher with little pullback or breather.

Since September 20, 2010 I have focused my commentary on the fact that the market’s refusal to pullback in the face of an overbought condition is a positive, and that strong bull markets always begin with such a condition. More recently on October 13, 2010, I pointed out a particular “overbought” condition that has had a perfect track record as a forecaster of future stock prices (see October 20, 2010 Market Commentary http://is.gd/gJq8W).

While this commentary may sound redundant keeping with the strength begets strength theme; what has changed since our risk model turned bullish on September 9, 2010 is the market continues to be overbought and that’s a good thing.

The market’s continued strength has now triggered our long-term indicators to the buy side. Based on our work, this simply indicates the odds favor a continued bull market advance. Pullbacks over the near-term should be contained to 4-6%, give or take a percentage point or two.

Based on our models, the primary trend of the market is up.

Mark Minervini

Comments from recent Master Trader Program attendees

2010-10-24T22:46:00.006-04:00

Thanks. It was a great experience learning from one of the all time great traders. I learned a lot and now in the process of setting up things to incorporate the learnings in to my trading.

Pradeep Bonde

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Thanks for teaching us to trade during the weekend - the meeting was fantastic.

Cheers,
Hongbo

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Thanks for organizing such a once in a lifetime event. I got many new tools that I needed and am already putting them into practice.

Matt

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Thanks for organizing. I have learned a lot. Congratulation it has been a memorable experience for me.

Regards,
Corrado

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Thanks for such a great weekend! I would love to do it again .. but, I probably need a few months to digest all the great information.

Take care,
Shawn Molodow

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Great event.

Marc Pearlman

Market Commentary – Wednesday October 20, 2010 posted @ 11:45PM/EST

2010-10-20T23:14:00.017-04:00

Over the past several days we nailed down some profits. We reduced our portfolio exposure from 25 long positions down to 13 longs and we added 2 short positions.

Notwithstanding a pullback in the major market averages of 3-5%, I remain positive on the market going forward. Yes, we sold some positions to lock in gains however; this is a natural rotational process with our portfolio management style and by no means is it an indication of long-term topping action as of yet.

The overall market picture has steadily improved over the past eight weeks with the DJIA rallying approximately 12%. The rally has put the market in overbought territory which has caused many traders to remain cautious as they wait for a pullback.

The fact that the market has refused to pullback in the face of an overbought condition is a positive. In fact, as a result, this has recently led to a rare event.

On October 13, 2010 the percentage of NYSE stocks trading above their respective 50-day (10-week) moving averages reached a level above 90%. In the past, this has had bullish implications 3, 6, 9 and 12-months forward.

Since September of 1970, every time this 90% milestone has been reached, the market went even higher; the S&P 500 Index posted positive returns 3, 6, 9 and 12-months later. This was the case in the 1970s, 1980s & 1990s and as recent as 2003 and 2009.

Mark Minervini

Master Trader Program October 15-17, 2010 in Myrtle Beach

2010-10-18T14:32:00.025-04:00

Saturday night dinner. A great group... we worked hard during the day and had some fun in the evening!

A Very Happy Customer!

Market Commentary - Friday October, 8, 2010 posted @ 11:05AM/EST

2010-10-08T10:14:00.012-04:00

Attempting to buy oversold conditions and sell overbought conditions as a trading strategy can be risky business. Trading with disregard for a strong directional trend will eventually lead you to buying into a bear market’s precipitous decline or shorting right into a powerful new bull market. Major market declines always begin with deeply oversold readings and roaring bull markets always get way overbought early on before they advance further.

The current market has shown considerable strength. Most traders are expecting a pullback which is widely viewed as “overdue.” While I would agree the market has come a long way with little pullback, I would also point out that so has every great bull market during its early phase.

During the initial leg up in a new bull market an overbought condition is a bullish event. As a matter of fact, the more overbought the better. During the initial leg we want to see the market stay overbought for a while, resisting significant pullback.

At such a point, if the market is truly strong, market pullbacks will generally be contained to 3-5% in the major averages. This pullback could be sharp and quick; the key is to see if the market can come right back in short order and how well individual stocks hold up in bases.

Right now, the key is to follow the stocks. As long as sound stocks set-ups continue to proliferate, buy the set-ups. It is possible that this market could be headed directly to new highs with little reprieve.

Current advice: buy the breakouts and stick to your stops religiously.

Currently our portfolio holdings include: ADTN, AGP, AHD, AKRX, ALTR, BJRI, CNI, COHR, DECK, FCFS, HGSI, HRC, IFSIA, IIVI, INTX, LTD, MCRS, MDCO, NKTR, PANL, PCYC, SHOO, SRCL, THI, VICR, WYNN, XTEX.

Mark Minervini

Market Commentary - posted Wednesday September 29th, 2010 @ 11:35PM/EST

2010-09-29T23:29:00.005-04:00

The Dow, S&P 500, NYSE Composite and NASDAQ Composite Index are all above their June highs. The Dow is now within striking distance - less than 4 percent - from its April 26th bull market high; the big-cap index has held above its 10-day moving average for 20 consecutive trading sessions with only minor distribution. While these are all positive signs, even more impressive has been the constructive action in leading names during the recent rally.

The proliferation of fresh new breakouts among high ranked SEPA® set-ups, suggest that this market may have even further to go on the upside. The majority of our portfolio holdings have held up well with only a few triggering stop-losses. Currently we are long 24 names, most of which are smaller than our normal weight position sizes. We are very close to moving to heavier weighted positions should our long-term model flash the “all clear” signal. This relatively rare bull signal may take some additional upside to trigger or perhaps a market pullback prior.

While the market could pullback and digest the recent run-up, I should point out that during the initial leg of a new bull market; pullbacks are generally contained to 3-5%.

There is plenty of headline risk brewing in the world. Whether it's the troubled US Dollar, credit default swaps or the Greek debt crisis, a wall of worry may be just what this market needs to continue its climb.

Our current portfolio holdings include: AGP, ADTN, AKRX, BJRI, CACC, CNI, COHR, EZCH, FCFS, HRC, IFSIA, IIVI, INTX, LTD, MCRS, MDCO, PANL, PCYC, PLCE, SHOO, SOLF, SRCL, THI and VICR.

We took profits in the following names: LVS, KEI, EDU, MDCO (partial) and BIDU

Mark Minervini

Market Commentary – posted Monday, September 20, 2010 @ 11:40AM/EST

2010-09-20T11:37:00.008-04:00

The market definitely has a silver lining; the NASDAQ 100 Index along with the IBD 100 Index has moved decisively into new high ground. If you look at the relative strength lines of these indexes, you will quickly see where institutional capital has been flowing in the equity market.

The broad market as measured by the Russell 2000 Index and the Value Line Geometric Index has consolidated and most stock breakouts have held up well. Adding to this improving picture is the fact that the market has ignored an overbought condition near resistance.

As I mentioned in my market commentary dated September 16, 2010: “I do feel a pullback here is overly obvious; maybe the shorts get pounded a little more and the rally grinds out some additional upside.”

Since, the NASDAQ Composite has rallied 40 points up to the 2341 area.

Today’s market action (as I'm writing) has the feel of the proverbial towel getting thrown into the ring (shorts running for cover with a rush to the long side). This could indicate that a short-term top or market pullback is near; perhaps starting today or within a day or two?

The action of recent breakout stocks during and after a market pullback will allow us to sort out the tennis balls from the eggs (we want to own tennis balls). This should also give us a better idea as to the potential sustainability of the current rally moving forward.

We remain long a number of mostly smaller than normal positions waiting to see if this market can continue higher and what affect an eventual pullback will have on those stocks that emerged as leaders during this rally.

We are currently long: AGP, AKRX, BIDU, CACC, CNI, COHR, EDU, HCR, IFSIA, MCRS, MDCO, PANL, QCOR and SRCL

Profits were taken in: KEI, LVS and MDCO (partial position)

Mark Minervini

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Market Commentary - posted September 16, 2010 @ 10:58AM/EST

2010-09-16T10:42:00.008-04:00

As previously mentioned, we are near obvious resistance on the major market averages (NASDAQ 2300/S&P 500 1131). During the past several weeks, the rally has carried the market as we projected, almost to the dollar.

Short-term traders may want to step aside and take some profits here. Intermediate-term traders however, could stick with their positions and go through a market pullback, with the understanding that it will be natural to get stopped out of some of your longs.

The subsequent resilience or lack thereof in individual names during and after a market pullback will be most telling about the health of the overall market.

I do feel a pullback here is overly obvious; maybe the shorts get pounded a little more and the rally grinds out some additional upside.

At this point, I'm less inclined to give positions much "room" until I declare a new bull market has begun in earnest.

Current longs in our portfolio include: AGP, AKRX, CACC, COHR, EDU, HRC, IFSIA, KEI, MCRS, MDCO, PANL and SRCL.

Profits were taken in LVS and MDCO (partial position).

Mark Minervini

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2010-09-15T15:02:00.000-04:00

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!!! REALIZE YOUR GREATNESS !!!

2010-09-14T14:33:00.006-04:00

Somewhere deep inside every living human lives an incredible being called Champion. It is often dreamed about and even sought after, but few make the real effort to track it down and harness its power. Why? Because the hunt is long, difficult and perceived as risky; an imaginary dream for many.

But, for those who press on and push themselves deep into the jungle, they reach a point where it becomes too late to turn back; it’s simply not an option, and it is at that very moment that success draws nearer by the minute.

It may not happen right away. Years may go by without a trace of success, but you press on. You know that this level of success rarely exposes itself and it remains elusive just long enough to weed out almost everyone. But you’re not the average human.

You also know that the seed of success has been with you from birth. It is there for you if you really want to realize it. This knowing gives you the confidence to be unconditionally persistent, which ensures your success.

Climbing Mount Everest is surely a challenge that few will attempt and even fewer will succeed at it. But that does not and should not stop one from trying to scale it.

There are those who reach the top; the rare individuals that know their greatness was in existence right from the beginning. They know that there are no gifted people, just people who understand, realize and appreciate the gift they have been given and enjoy it to the fullest.

GO FOR IT!

Mark Minervini

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Market Commentary - posted Sunday September 12, 2010 @ 10:49PM/EST

2010-09-12T20:54:00.025-04:00

Over the past several weeks our Tier 1 Buy Alert List has expanded significantly, which is certainly a good sign and a definite step in the right direction. The overall market has also performed well during the past couple of weeks however; the real test will likey come at the 1131 level on the S&P 500 and the 2341 level on the NASDAQ Composite. Both levels have proved difficult to penetrate for the broad market.

Not withstanding short-term pullbacks, my feeling is the NASDAQ Composite may have a bit more to go on the upside before any significant profit taking comes in; the 200-day moving average is most likely its next stop and perhaps a shot at the 2310-2341 level.

This past week we added a few more long positions to our portfolio. Our holdings have held up relatively well since we initiated our purchases with MDCO and LVS turning in the best performances so far. Our strategy at this point is to take longs as they set-up and ONLY increase exposure on the heels of successful trades. If we begin to have difficulty via excessive stop losses getting hit, we stand ready to quickly cut back our exposure.

The proliferation of constructive price set-ups and the recent surge in our buy list gives us confidence to buy select situations. Success in the form of backlogged profits and the emergence of additional set-ups will result in an even more aggressive posture on the long side. Until then, we remain very selective, taking smaller than normal positions.

A few of our current holdings that have not yet advanced much from our purchase prices including ROVI, COHR, EDU, AGP, HRC and KEI are still set-up constructively. This may give us an opportunity to increase our exposure in these names.

The underlying current of the market has steadily improved however; keep in mind, the overall market as measured by broad indexes such as the Russell 2000 and the NASDAQ Composite remain in a primary downtrend.

It’s important to remain patient and disciplined. If in fact the market has indeed bottomed, there will be sufficient time to position your portfolio to take advantage of a primary uptrend that would likely persist and provide ample opportunities for many months during the next bull market.

Mark Minervini

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2010-09-10T13:50:00.006-04:00

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2010-09-09T00:39:00.002-04:00

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Spend 2-days, side-by-side with U.S. Investing Champion Mark Minervini learning how to trade like a Stock Market Wizard!

FOR THE FIRST TIME EVER Mark Minervini reveals his SEPA® methodology!

The Master Trader Program is a hands-on workshop; LOCK UP YOUR SEAT TODAY!

To view event schedule go to the following link:
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Trading Room - Commentary Re-Cap Tuesday – September 7, 2010

2010-09-07T14:17:00.003-04:00

In the Minervini Private Access Trading Room today @ 1:45PM/EST, Mark Minervini reviewed the markets from a longer-term perspective explaining that he still would like to see the right-hand side develop in the indices to confirm a change in direction from a primary downtrend to a new uptrend.

He also compared stocks including: LVS, SRCL, COHR, YUM, THI, BIDU, PWER, ROVI, EZCH, KRA, FFIV, VMW, MDCO, INTX, MCD, DE, ADTN in comparison to the Nasdaq Composite and S&P 500 Indexes pointing out key price action and market activity to gain perspective of the leadership stocks and relative price strength within the context of the market.

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2010-09-07T09:51:00.006-04:00

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The Master Trader Program is a hands-on workshop; Mark Minervini reveals his methodology! LOCK UP YOUR SEAT TODAY!

To view event schedule go to the following link:
http://www.minervini.com/events.php

or go to:
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The Best Way to Become a Champion Trader is to Learn from One...

Market Commentary - Monday September 6, 2010 posted @ 11:30PM/EST

2010-09-06T23:20:00.006-04:00

As I pointed out in my market commentary Tuesday August 31, 2010:

“Given the fact that the market is oversold and sentiment is relatively pessimistic, a short-term rally could present itself any day and possibly even last for one or two weeks.”

http://markminerviniblog.blogspot.com/2010/08/market-commentary-posted-tuesday-august.html

Since my August 31st commentary the Dow has rallied 447 points in only three days, our stock list of potential buys has expanded and we have added a few longs to our portfolio.

As a key component, our SEPA® strategy requires a prior uptrend in individual stocks to qualify as buy candidates; I guess one could say we are in the trend following camp. This prior uptrend always precedes our entry and often these individual stock trends are spotted prior to a market bottom.

As a result, at times, we move aggressively to the long side very close to a general market low due to a preponderance of bullish evidence we rely upon setting-up around the time the market is making its low; this was the case near the February 2010 low.

There are also those instances when we have not entered the market aggressively until new highs were hit in the major averages; April 1995 comes to mind as a textbook example.

Either way, for us, it really doesn’t matter. What is important is when stocks meet our proven Specific Entry Point Analysis® criteria. Until then, we wait patiently regardless of how the Dow or some other popular average may be wiggling. We have found the inability to wait for the proverbial pitch to come across the plate to be one of the biggest weaknesses of amateur investors and as a result, the cause of significant losses during whipsaw environments as the market is searching for its footing.

Currently, we see the market’s underlying tide moving in the right direction. With that said, there is still not enough evidence that gives us a strong conviction that a firm bottom is indeed in place. We would like to see the recent emergence of leadership stocks hold up while an additional wave of post leadership emerges on the heels of the first wave. This should take place while we avoid any major distribution in the major averages.

A few names have been added to the portfolio and a host of stocks recently moved up to our buy alert status. It is certainly possible that a substantial low has been made in the market however; a new bull market that propels many individual names significantly higher does not always begin at or around the low; sometimes bottoming is a process that takes place over weeks or even months. We are most interested in being heavily involved in the market when stocks are advancing in earnest. In our experience, these periods are well worth the wait providing the lowest risk/reward while offering tremendous opportunity.

The Dow and Russell 2000 have rallied right into the 200-day moving average while the NASDAQ Composite and S&P 500 lag behind. The overall market will likely experience at least temporary resistance around the 1131 area on the S&P 500 and the 2341 area on the NASDAQ.

Our market risk model is short-term bullish, intermediate-term negative and long-term negative.

We have seen a number of stocks come up the right side of their respective price bases. The key now is to see if the market can produce buyable pivots and if proper stock set-ups in individual names proliferate.

Mark Minervini

Market Commentary - posted Tuesday August 31, 2010 @ 11:06PM/EST

2010-08-31T23:04:00.003-04:00

We remain on our April 27th sell signal and continue to advise a defensive posture for the time being.

So far the market has not followed through to the upside on the heels of decent gains scored on the 25th and 27th (last Wednesday and Friday). Monday the Dow lost 141 points or -1.39% while the NASDAQ dropped -1.56%; volume was anemic on all the major averages.

Currently, the market is oversold with “key support” for the S&P 500 at 1010. Given the fact that the market is oversold and sentiment is relatively pessimistic, a short-term rally could present itself any day and possibly even last for one or two weeks. Until our risk model improves and we see a number of stocks set up in a constructive manner technically, we view these rallies as temporary snap-backs within the context of a primary downtrend.

With that said, a change in direction could take place in just a number of days or weeks; the key is to remain patient but ready to act swiftly.

A few high ranked SEPA® stocks on our buy alert list include: THI, ADTN, SRCL, YUM, CGNX, COHR, IDIX and EZCH.

Mark Minervini

!!! TONIGHT !!!

2010-08-29T19:39:00.001-04:00

8:00PM Mark Minervini will be appearing on The Next Big Move with Joe Fahmy

http://stk.ly/9dTW2Z

Upcoming Interview with Mark Minervini

2010-08-25T09:51:00.003-04:00

This Sunday August 29th at 8:00PM Mark will be appearing on The Next Big Move with Joe Fahmy

http://stk.ly/9dTW2Z

Market Commentary - Sunday August 22, 2010 posted @ 11:34pm/est

2010-08-22T23:33:00.001-04:00

We remain on our April 27, 2010 sell signal. Sound stock set-ups have dwindled down to only a handful of names, leaving a small group of leadership stocks in sound price consolidations patterns. While some of the former leaders including NFLX, AKAM, CRM, FFIV, MELI, & BIDU continue higher, volatility has made for difficult trading for the longs as well as the shorts. Recent Pilot Buys resulted in an excessive number of stops frequently hit and only served to reiterate our negative stance.

Stocks currently displaying high SEPA® rankings and a sample of those to watch going forward include: AAP, AMT, ARNA, HAS, HMIN, PAY, MCD, NBIX, RDWR, SRCL, THI, WYNN, EDU, HSNI, LXK, NZ, ROVI & ISLN.

If we see additional base failures and breakdowns proliferate among the narrowed group of set-ups mentioned above, it would suggest that the July lows for the major averages may be in jeopardy or at least tested.

Our advice has not changed since April 27th; remain defensive.

Mark Minervini

!!! TAKE YOUR TRADING BEYOND THE NEXT LEVEL !!!

2010-08-20T08:51:00.003-04:00

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The Master Trader Program is a hands-on workshop; Mark Minervini reveals his methodology! LOCK UP YOUR SEAT TODAY!

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The Best Way to Become a Champion Trader is to Learn from One...