Trend research
What is SEPA? Stage 2 and the Trend Template
An introduction to Mark Minervini's SEPA method: what it is, the Stage 2 idea, why traders use a trend template and how GSDAQ uses a screen inspired by it.
What is SEPA?
SEPA stands for Specific Entry Point Analysis, the stock-trading method Mark Minervini lays out in his 2013 book Trade Like a Stock Market Wizard and teaches through his own education service. In short, SEPA looks for stocks that are already in a strong uptrend, which Minervini calls Stage 2, and then works out when to enter. Its first filter is the Trend Template, a checklist that tells you whether a stock is in Stage 2 at all. This page is an introduction to those ideas, not the complete method or an official course. Mark Minervini, Trade Like a Stock Market Wizard (McGraw Hill, 2013)
Sources: Mark Minervini: official SEPA education and services
What does Stage 2 mean?
Minervini divides a stock's price cycle into four stages and looks for buying opportunities only in the second one, after a stock has come out of a quiet base and started to advance. The idea is to avoid stocks that are asleep, topping out or falling, and to spend attention on those the market is already pushing higher. Mark Minervini, Trade Like a Stock Market Wizard (McGraw Hill, 2013)
On narrow screens, scroll the table sideways. Keyboard users can focus the table and use the arrow keys.
| Stage | Name | What it looks like |
|---|---|---|
| Stage 1 Source | Neglect (consolidation) | The price moves sideways after a decline and draws little interest. |
| Stage 2 Source | Advancing (accumulation) | The price breaks out of its base and trends higher as buyers accumulate shares. |
| Stage 3 Source | Topping (distribution) | The advance stalls near the highs while holders sell into strength. |
| Stage 4 Source | Declining (capitulation) | The price trends lower and sellers stay in control. |
Why do traders use a trend template?
A written checklist turns "is this stock in an uptrend?" into conditions anyone can check the same way on the same data. It narrows thousands of stocks to the ones in Stage 2 before the slower work of studying the business and the chart. Minervini's Trend Template has eight conditions; the table restates seven of them in our own words. The eighth? That one is worth hearing from the source: it is in chapter 5 of Minervini's book. Mark Minervini, Trade Like a Stock Market Wizard (McGraw Hill, 2013)
Sources: sharpely: Minervini Trend Template guide (uses 25% for the 52-week-low rule) · TradingView, Pro-Setups: Mark Minervini Trend Template Criteria script (25%, noting 30% in the book)
On narrow screens, scroll the table sideways. Keyboard users can focus the table and use the arrow keys.
| Condition | Rule |
|---|---|
| 1 · Above the long averages Source | The price is above both the 150-day and the 200-day moving averages. |
| 2 · Long averages in order Source | The 150-day moving average is above the 200-day moving average. |
| 3 · 200-day rising Source | The 200-day moving average has been rising for at least one month; longer is better. |
| 4 · 50-day on top Source | The 50-day moving average is above both the 150-day and the 200-day averages. |
| 5 · Above the 50-day Source | The price is above the 50-day moving average. |
| 6 · Off the lows Source | The price is well above its 52-week low: at least 30% in the 2013 book. Some screener guides use 25% instead, for example sharpely's Trend Template guide and Pro-Setups' TradingView script, so check which threshold a screener applies. |
| 7 · Near the highs Source | The price is within 25% of its 52-week high, meaning no more than 25% below it; the closer, the better. |
How does GSDAQ use a trend template?
GSDAQ's growth trend list uses a screen inspired by the Trend Template. It is not an official implementation, GSDAQ is not affiliated with Minervini, and its conditions and data can differ from the book's, so compare the conditions shown with the list instead of assuming they match. When a stock enters or leaves the list, first check the list's date and those conditions. Treat the change as a prompt to look at the company and its data: a removal may only mean a threshold was crossed in that snapshot, and neither change is an order.
Define the observations before the rule
Write down whether your input is a daily close, an intraday observation or a completed weekly candle. Also record the price adjustment basis and how missing sessions are handled. For a simple moving average, the intended window counts observations, not calendar days. If a dataset does not contain the required history, label the result unavailable. Replacing missing history with zero creates a number without the intended meaning.
A worked example of one trend condition
For illustration, choose a rule that the latest close must exceed a 50-session simple average. Suppose 49 closing observations sum to $4,900 and the latest close is $120. The 50-observation mean is ($4,900 + $120) / 50 = $100.40, so this one condition passes. This invented example is only one possible filter, not the full Trend Template. It says nothing about the price at which a later order could execute.
Qualification is separate from execution
A screen can tell you whether the recorded inputs meet a defined condition. It does not supply all the decisions around entry, position size, liquidity or an invalidation point. Keep these questions outside the qualification label. If two services disagree, compare their timestamps, adjusted prices, windows and thresholds before deciding that one implementation is wrong. A single different observation can matter near a boundary.
Why a historical list is not a performance record
To investigate a screen, preserve the list as it was knowable at each observation time, including companies that later disappeared from your dataset. Specify when a hypothetical transaction could occur and include the costs used in the experiment. Looking only at today’s surviving winners can make a rule appear stronger than the experiment actually supports. A qualifying label and a documented simulation are different pieces of evidence.
A trend filter is not the academic momentum factor
The French Data Library forms its monthly momentum factor from portfolios sorted on size and prior months 2–12 returns. That construction differs from a single-stock moving-average condition and from the full SEPA method. The reference helps clarify the horizon and comparison group; it does not mean GSDAQ reproduces that factor or delivers its returns. Kenneth French Data Library: monthly momentum factor construction
Sources
- Mark Minervini: official SEPA education and services
- Kenneth French Data Library: monthly momentum factor construction
- Mark Minervini, Trade Like a Stock Market Wizard (McGraw Hill, 2013)
- sharpely: Minervini Trend Template guide (uses 25% for the 52-week-low rule)
- TradingView, Pro-Setups: Mark Minervini Trend Template Criteria script (25%, noting 30% in the book)