Mark sits in on the IBD Live “show” on occasion and for the 8/28/24 show, he spent some time talking about his approach.
There is no direct link I can find, but it is under the Videos then “IBD Live Videos” (you can see this one but not all if you don’t subscribe to IBD Live).
Minervini: How To Trade Key ‘Inflection Point’ For Market And Stocks - Video - IBD (investors.com)
Here are the notes I took for myself…
He once invested by looking first at the market, then the best groups, then the best stocks. But that caused him to miss the market leaders. Now he is turning that upside down, first look for the leaders, then examine their group (e.g. AI), then look at the market.
This has led him to sometimes invest before an FTD because the strong stocks are breaking out off the bottom of the market. When the market is in correction, look for strong RS and the Blue Dots.
When he sees the right sides of the base tighten up and if they start breaking out and he sees a proliferation of ideas and he starts getting traction on buys, “that’s it and I start bumping up exposure”, “if not, I cut and run”
And we are starting to get to that inflection point now.
Bill once told him, “you don’t have to know what a stock is going to do, you have to know what it has done”. (that is an echo of Livermore). (I suppose what a stock has done in a downturn by showing strong RS and setting up an early base is what he is implying in this context)
Many of the stocks he has made big money on are stocks that stopped him out 2 or 3 times. Don’t walk away because the stock is not acting well in the short term if the stock is not making any major violations. Look for that reentry.
Institutions drive the market, we look for that as confirmation or violations. (David Ryan has same approach) (Read the Minervini book, How To Trade Like a Champion)
He is a little suspicious going into the rate cut because the markets already have a 100% bet that they are going to happen, so maybe it will be a “sell the news” or a blow off and then sell the news.
The presidential cycle points to a strong second half this year and a strong first half next year. But this is a bizarre election.
We have seen every historical indicator pointing to a recession, but COVID really distorted the market and economy.
But, to cut through all the noise, he just watches stocks coming out of bases controls risks with stop losses. Progressive expose leads you to trading the largest when you are doing your best and the smallest when you are doing your worst. As trades are working, he is getting bigger and more aggressive. If trades are failing, he does not try to get even with a “revenge” trade, he starts coming back in very slowly. You have to avoid getting in a hole where you only hope is to break even next time, not getting ahead.