The rules we tested
- Close above the 150 and 200 day averages, and the 150 day above the 200 day.
- The 200 day average higher than a month ago.
- The 50 day above the 150 and 200 day, and the close above the 50 day.
- Close at least 30% above the 52 week low and within 25% of the 52 week high.
- 12 month return in the top 30% of eligible stocks (the relative strength rule).
- Checked on the first trading day of each month; bought at that close and held 20 trading days.
- Stocks: US stocks above $10 trading at least $20 million a day on average, including companies that later stopped trading.
- Judged against: the average eligible stock over the same days, after a 0.1% round trip cost, and against random stocks bought on the same day.
*2025 runs to May.
As a filter on momentum picks
We also tried the template the way many traders use it: as a filter on the strongest stocks. Our Momentum Leaders list holds the 25 stocks with the strongest 12 month gains. Requiring them to meet the template as well cut the average month from +1.09% to +0.61% against the average stock, and the template version was ahead in only 39 of 82 months. The worst month was no better either: −17.8%, against −16.1%.
The VCP style breakout
Minervini pairs the template with the volatility contraction pattern. We tested its core, a tight range breakout: in an uptrend, the narrowest 10 day range in 60 days, then a close above it. Across 6,456 trades it did 0.10% worse than the average stock over 10 days.
The most recent 18 months
In the most recent 18 months, which we held back and checked separately, the same rules gave 4,832 trades and +0.37% against the average stock, with 55.6% of trades making money. That is not enough to tell apart from luck.
What it means for your trading
- The template is a good description of what a leader looks like, not a signal that it will keep leading.
- Its rules overlap heavily with simple 12 month strength, which is the part that did hold up in our tests.
- Minervini also uses tight stops and position sizing, which we did not test.
Limits: daily closes from mid 2018, which includes one bear market (2022). Results are averages over thousands of trades; any single trade can do far better or worse.