Unlock Success: Mark Minervini’s Trend Template

Mark Minervini Trend Template

Introduction

Mark Minervini, was one of America’s most successful stock investors. After spending 37 years as a Wall Street veteran, he is considered an authority on the stock market. He is the author of the best-selling book – ‘Trade Like a Stock Market Wizard‘. In his more than 30 years of experience as a stock market trader, Mark wrote a few books regarded as gems by the stock market students. His groundbreaking book on investment is the book where he showed the Mark Minervini trend template. The book – Trade Like a Stock Market Wizard contains his famous screener, Mark Minervini’s Trend Template Screener. With this screener, you can screen the growth stocks. He shows how to catch the growth stock in Stage 2 of the life cycle.

Mark Minervini's Trend Template
Mark Minervini’s Trend Template

Mark Minervini is a genius. Apart from this book, he also wrote another book Trade Like a Champion, which is equally famous. In addition, his proprietary stock entry point methodology showing how and when to enter a stock is also equally famous. It is known as the SEPA (Specific Entry Point Analysis) methodology which he teaches through his private access. Using this technique, he gained 121% in only six weeks. All through his investment career, he gained huge profits using his proprietary method of investing. His worst annual performance year also gave him a whopping 129% gain!

We will discuss here his proprietary Trend Template and Mark Minervini’s Trend Template Screener. Mark Minervini’s Trend Template and screener show us how to identify the growth stage and how to enter for maximum gain.

Key Components of Mark Minervini’s Trend Template

Mark Minnervini’s Trend Template specifically focuses on Stage 2 of stocks. Mark, in his search for superperforming stocks, created this trend template. He believes that every superperforming stock has to be in an uptrend before making a big leap.

Mark Minervini's Trend Template
Mark Minervini’s Trend Template

To qualify as a superperforming stock, he found that the stock goes above the 200 MA (moving average) and also most of them trades above the 50 MA price. These stocks fulfil other criteria as well. Thus, he created the trend template which acts as a screener. The trend template screener screens every stock and finds the stocks which qualify as stocks ready for superperformance.

The trend template picture shows the criteria above. Without going into details, the price of the screened-out stocks should be above their 150 and 200 MA price lines. Also, the current price has to be above the 50 MA price. In addition, the shorter period MA price lines must be above the longer period MA line. Therefore, 50 MA must be above 150 and 200 MA lines. Also, the stock must be trading above the 50 MA price. The current price must be well above the 52-week low and within 25% of the 52-week high price. In addition, the stock must be trading above 70 Relating Strength rating, better near to 80 and 90 RSI mark.

According to Mark Minervini, a trader must consider whether a stock passes this qualifier test to consider it for investment. Once the stock passes the qualifier, the stock is in Stage 2, in the uptrend and is ripe for investment.

When the stock is in a definite uptrend and investors’ money is pouring in, one can jump the wave. During Stage 2, there will be short price pullbacks.

Implementing the Trend Template

Implementing the trend template is critical. Two leading indicators, Price and Volume play a big role in determining the stages. Stage 2 is the stage of price growth. When the price increases are supported by big volumes, we can ascertain future price growth. On the other hand, the moving averages, as shown in these pictures, confirm the existence of Stage 2. Traders and investors always want to invest in Stage 2 when the invested money grows quickly over time and gives the desired profit.

OFSS Daily Chart
OFSS Daily Chart

We can see that in the daily chart of OFSS above, the stock maintains all the conditions given in Mark Minervini’s Trend Template. OFSS is trading above the 50 period MA, 50 period and 150 period MA line is above the 200 period MA line. But the price is at a lifetime high and volume growth is average. Hence, we will say, perhaps the stock is well in stage 2 and may continue its upward journey very soon after some consolidation. The growth story started when the stock’s price crossed above the 50-period MA line and was close to the previous 52-week high.

Breakout Criteria

There is no point that marks the stage specifically. It is all about digesting the idea before implementation. The more you go to depth, the more the understanding. That is why, it is said that trading is an art, not science.

It is important to check the breakout criteria. We can use the Price-Volume relationship and see when during the price breakout, big volume growth supports the price growth. When the price breaks out and maintains all conditions shown in the trend template and near the previous 52-week high of the price, we may invest after the price breakout is ascertained.

Hence, we can safely say that though the screener screens the stocks that are in Stage 2, it depends on the investor when to make the investment decision. Therefore Mark Minervini’s Trend Template Screener is a primary stage which helps to select a number of stocks from which the investor picks the right stock.

Introduction to Chartlink.com Screener

The website chartlink.com provides us with a similar scanner. It is similar to Mark Minervini’s Trend Template Screener which is readily available. It has used similar conditions to create the scanner. Conditions are as follows.

  • The price of the stock is over 200 MA.
  • RSI is over 70.
  • Other conditions are customisable like Highest Volume and other technical parameters like MACD, ATR, Bollinger band, ADX, CCI etc and fundamental parameters like P/E, Book Value, P/B etc. to screen stocks as per requirement.
Chartlink.com Screener
Chartlink.com Screener

Chartlink.com provides these screener facilities. You can scan the stock market using the above scanners as per your desire. All these screeners give fast scan results.

You can also use Mark Minnervini’s Trend Template Screener on the Chartlink website. We have already discussed the conditions of the trend template screener by Mark Minnervini. We can put those conditions in the chartlink.com screener and build the trendline screener there. From the results available we can find the list of stocks that are in Stage 2. After obtaining the list, we can find from the respective technical charts, which stocks are coming up from the bottom.

Then we can wait for the price breakout with high volume and wait for breakout confirmation. We will only invest after we are confirmed about the price breakout. This confirmation is necessary. Unless the price breakout is confirmed, your investment will not give you a quick profit. During such a time, it is also necessary to check the macroeconomic conditions and overall market scenario. If the overall situation is favourable, you can invest and expect a good profit.

In addition, you can also build a custom screener and create a chosen stock list for yourself.

Creating a Custom Screener

We can build a custom screener using the chartlink.com website. Shown below are some conditions using Mark Minervini’s Trend Template Screener using the Nifty 500 group of stocks. Conditions are as follows.

  • The closing price is above 150 and 200 MA.
  • 150 MA price >200 MA price.
  • The current 200 MA price is greater than 200 MA price of 21 days ago.
  • The current 200 MA price is greater than 200 MA price of 105 days ago.
  • 50 MA price is greater than the current 150 and 200 MA price.
  • Daily price > 50 MA price.
  • Daily minimum price > 1.3 * daily minimum price of 252 days.
  • Daily maximum price > 0.75 * daily maximum price of 252 days.
  • All prices have to be closing prices.
Mark Minervini's Trend template
Mark Minervini’s Trend Template

In addition, anybody can create a custom screener using the chartlink website screener window. In addition, there are other websites like Tradingview, Screener.com and others that provide customised screeners and screener libraries from which you can pick a screener and use it for scans.

Identifying Opportunities Based On Mark Minervini Trend Template

Mark Minervini, through his research, found out that the trend template is extremely useful. He used the trend template to scan the market and invest in the stocks to extract maximum benefit. And he continued to reap rich harvest year over year. We can follow in his footsteps and use the trend template to scan stocks for investment.

Using Mark Minervini’s trend template scanner we got the following result as shown in the picture.

Screener Result
Screener result

This is how we can obtain a list of stocks which are in stage 2 and show opportunities for investment.

We have shown how to scan the market using the trend template. Using it you can scan every segment, sector or group of stocks chosen by you and invest accordingly.

Use the trend template to scan the stock. The chosen group can be from Nifty 50, small-cap, midcap, large-cap or you can choose the criteria. After the scan result is out, check each stock for the breakout price and confirmation. When all conditions are fulfilled invest wisely.

Benefits of Mark Minervini Trend Template

Every investor and trader wants to invest in stocks that can give maximum profit. But choosing a stock is difficult. The trend template by Mark has shown us how to choose a stock that is in stage 2. We can modify the screener, refine the result, or put another filter or two with the scanner but this 8-point screener is accepted worldwide as a guide. An investor knows the starting point for investment.

But to extract the maximum benefit, we need to study the charts of the chosen stocks obtained by the screener and pinpoint the investment zone. Then, with the right money management skills like using different stop loss, and trailing stop loss protect your money and ride the wave.

The trend template doesn’t show the price breakout zone and end of stage. Using stop loss and profit targets you can protect your money and win big.

Conclusion

In the end, I should only say, that you need to study Mark Minervini’s two books, Trade Like a Stock Market Wizard and Think and Trade Like a Champion and study them deeply. The idea of how to invest and make a profit doesn’t end with Mark Minervini’s Trend Template. One needs to study further and grasp the ideas put forward in his well-researched books. One should not consider these books as the holy grail but study deeply to have a deep understanding.

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Author: Partha Dhar

Partha is a market analyst, FNO analyst, mutual fund advisor, blogger and a full-time trader since 2005. He also teaches market analysis online

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