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Q&A with Mark Minervini

June 06, 2013



 

Q:  If an up trending chart looks great but we're in a down trending market, do you buy the stock or remain on the sidelines?

 

A:  If I have evidence that we are in a correction or worse, in a bear market, I will generally stay on the sidelines or at the very least, trade lighter than normal.  If I see signs of accumulation in the major averages and stocks are setting-up constructively, I will take some small “pilot buys”, however, I won’t really step up my trading until I see a second wave of stocks set-up subsequent to the first wave, provided that the my pilot buys show some progress.  In most cases, I want to see additional follow through in the averages around the same time.

 

Q:  Would you choose to invest in a stock with unfavorable fundamentals in a very bullish environment? 

 

A:  The best trades are often when you have fundamentals, technicals and market tone all in your favor.  So, I try to focus on companies that have solid characteristics during a healthy market environment.  The only time I completely ignore fundamentals are in very high momentum situations where the chart is saying something big is definitely going on.

 

Q:  Can you describe your money management strategies? What percent do you put on initially?  How do you add and how do you exit?

 

A:   I incrementally commit to positions until I have an indication that conditions are right; then I step on the gas.  My position sizing is based on liquidity; as long as things are working out, I try to put on as much as I can up to 25% of my portfolio.  I trade much smaller when I’m less confident.        

 

Q:  Do you consider volume in your decision to buy or pass?  

 

A:  Volume on a breakout is a good indication however; I won't always abandon the trade if volume doesn't come in on the first day. Often volume comes in a day or two later. Lack of volume however, does raise a red flag; volume would need to come in soon after. As always, maintain your stop regardless.

 

 



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