This is the fifth article of Mark Minervini’s Growth Stock Investment series.
If you missed the previous article, please read it from the link below.
For more information on Minervini’s investment method, please actually purchase a book and chew it firmly.
Entry Point
In this article, I will introduce the entry point among the five major elements of Mr. Minervini’s growth stock investment method “SEPA.”
Almost all fast-growing stocks provide at least one opportunity to catch a tremendous rise in low-risk buying floors.
Mr. Minervini says that it is important to find the best entry point, and depending on the entry timing, it may lead to a stop-loss more than necessary or it may lead to a big profit.
The best time to buy a stock is to make an unrealized gain as soon as you buy it, and to achieve this, you need to have solid fundamentals and technical.
To summarize the points, it is important to carefully identify the VCP on the chart before purchasing a stock!
VCP
Minervini says that the Volatility Contraction Pattern (VCP) needs to be well-identified in order to get the best timing for stock purchases.
The VCP means a pattern in which the volatility decreases from left to right on the chart, and as a feature, the volatility usually decreases about 2 to 4 times, and when the stock price goes up, volume will decrease.
Purchase near the New High
It is desirable to buy stocks near the new highs, but the main reason is to avoid getting in the way of investors (overhead supplies) who want to close near the break-even point.
Pivot Point
When the price range exceeds the minimum resistance line (pivot point) during the narrowest period in the flat range of the chart, it can be considered that the rising phase begins.
Selling power is low at this level, so it’s rarely deceived, and even small buying demand can cause stock prices to skyrocket.
Volume is constantly declining on the right pivot point, often well below average.
A decrease in trading volume means that the number of trading participants has decreased, and that even a small amount of buying will cause the stock price to skyrocket.
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