Mark Minervini's Trend-TemplateIn the last tutorial, we have highlighted the importance to look for stocks in a confirmed stage 2 uptrend and explained why.
But how can we use technical chart analysis can be used to identify stocks in a stage 2 uptrend?
US investment champion Mark Minervini developed the so-called Trend-Template which can be used to screen for stocks in a confirmed stage 2 uptrend.
TradingView provides all of the relevant tools to automate this screening process. The following section summarizes the technical characteristics which must be met so that a stage 2 uptrend for a stock can be confirmed:
Trend-Template to confirm a STAGE 2 Uptrend
1. Stock price is above both the 150-day (30-week) and the 200-day (40-week) moving average price lines.
2. The 150-day moving average is above the 200-day moving average.
3. The 200-day moving average line is trending up for at least 1-month (preferably 4-5 months minimum).
4. The 50-day (10-week moving average) is above both the 150-day and the 200-day moving averages.
5. The current stock price is at least 25% above its 52-week low. (Many of the best selections will be 100%, 300% or even greater above their 52-week low before they emerge from a sound consolidation period and mount a large-scale advance).
6. The current stock price is within at least 25% of its 52-week high (the closer to a new high the better).
7. The relative strength ranking (as reported in Investor’s Business Daily) is no less than 70, but preferably in the 90s, which will generally be the case with the better selections.
8. Current price is trading above the 50-day moving average (exception “Low Cheat” setups
Remark for 7: the relative strength ranking as reported by IBD is only accessible for IBD embers but the TradingView indicator 'Relative Strength (IBD Style)' by SKYTE can be used as an alternative.
We at JS-TechTrading only consider stocks for our watchlists which are meeting all characteristics of Minervini's trend-template. Additionally, we are screening stocks for solid fundamentals using William o' Neils' CAN-SLIM methodology. This screening process in itself provides us with a significant competitive edge versus most other traders are doing.
