This involves pinpointing the exact moment smart money acts, often using the Volatility Contraction Pattern (VCP) to find tight consolidations before a breakout.
Stocks must be in a Stage 2 uptrend . Minervini uses a seven-point "Trend Template" to ensure the stock is being accumulated by institutions.
The core of Minervini's success is the system. Unlike strategies that rely solely on one type of analysis, SEPA integrates four critical components to identify high-probability winners: This involves pinpointing the exact moment smart money
Identify the catalysts—new products, management changes, or industry shifts—that will sustain the move. Identifying Winners with the VCP Pattern
Never let a small loss turn into a big one. Minervini often advocates for strict stop-losses to protect trading capital. The core of Minervini's success is the system
The stock's price swings become progressively smaller (e.g., from a 25% correction to 10%, then 5%).
The final, tightest part of the contraction where volume dries up. This is the low-risk entry point. Risk Management: The Foundation of Superperformance Minervini often advocates for strict stop-losses to protect
Look for companies with explosive growth, typically 20% to 25%+ quarterly earnings growth . Accelerating trends and positive earnings surprises are key catalysts.