Profitable Trading Strategy For Any Market!
THE SEPA STRATEGY "Specific Entry Point Analysis
Specific Entry Point Analysis — SEPA is a highly disciplined stock trading strategy developed by Mark Minervini.
SEPA STRATEGY has five key components:
1. Trend
2. Fundamentals
3. Catalyst
4. Entry Points
5. Exit Points
Let’s Discuss all components of this strategy in detail.
1) Trend
The first thing to look for is a trend, whether it is up, down, or sideways.
2)Fundamentals
The most important fundamentals are sales, profit margins, and earnings.
3) Catalyst
In simple terms, a catalyst is simply the spark that ignites a fire.
The hidden news or positive push to the stock that will cause it to catch fire is referred to as the spark to ignite fire.
4) Entry Points
Every stock will provide you with the opportunity to enter at a low risk entry point.
You just need to find the right point where Risk: Reward is favorable.
5) Exit Points
- Don’t marry or commit to a stock.
- You must eventually sell and record gains.
- Never become dependent on a stock.
There are four phases of stock price maturity
Stage 1: Consolidation or Neglect Phase.
- Sideways Movement
- 200 DMA Oscillation
- Volume Contraction
- Never do bottom picking here at this stage.
Stage 2: “The Accumulation Phase or Advancing Phase”
This stage typically follows Stage 1 in progression.
- Series of Higher high and Higher Low
- Volume Spikes followed by low volume pullbacks.
- Stock should be above 150 and 200 DMA.
Stage 3: “The Topping Phase” or “The Distribution Phase”
- High Volatility
- Largest one day decline since beginning of stage 2
- Stock Price may undercut 200 DMA.
- 200 DMA will flatten and then start downtrend
Stage 4: “The Declining Phase” or “CAPITULATION”
You should avoid buying any stock in Stage 4
Here are a few characteristics
- Price Action below 200 DMA.
- Stock hitting new 52w lows.
- Series of Lower Low and Lower High.
- Short Term Moving averages are below Long Term Moving averages.
- Big Volume Spikes on fall days and low volumes on rise days.
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