Stock Market Wizard, U.S. Investing Champion Mark Minervini Shares Ideas and Wisdom Here FREE!
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.