Two traders, one idea
Stan Weinstein published stage analysis in 1988. Mark Minervini, a US trader who won the US Investing Championship, set out his Trend Template and the volatility contraction pattern (VCP) in Trade Like a Stock Market Wizard in 2013. A generation apart, they start from the same place: only buy stocks that are already in an uptrend. Minervini describes the same four-stage cycle in his book, and his Template is a precise way of checking that a stock is in the advancing one.
Where they differ is in what else they check.
The Trend Template in plain words
The Template is eight conditions, and a stock must pass every one. In plain words, they ask:
- Are the moving averages stacked the right way — the short above the long, and the long one rising?
- Is the price above those averages?
- Is the price well off its 52-week low — the stock has already risen from the bottom?
- Is it near its 52-week high — not in a deep pullback?
- Is it stronger than most other stocks (relative strength)?
The exact thresholds are Minervini's, published in his book, and we publish them in full on the Trend Template screen so you can check every stock against them.
How the two compare, tonight
Three things usually stand out. The Template is stricter — fewer stocks pass all eight points than are in Stage 2, because it demands a stock be near its highs and well clear of its lows. The two overlap heavily — most Template passers are in Stage 2; they are two views of the same kind of stock.
And look at the last number. Usually only a small share of Template passers are still early in their Stage 2 move. A checklist that wants stocks near their highs tends to find stocks that have already run — strong trends, but often late ones. That is exactly where stage analysis's "early beats late" earns its place.
What each adds
| Stage analysis (Weinstein) | Trend Template (Minervini) | |
|---|---|---|
| Main chart | Weekly, one 30-week average | Daily, three averages |
| What it checks | The trend's stage, and its slope | A precise checklist of price and averages |
| Market and sector | Central — check them first | Checked, but outside the Template |
| Where in the move | Prefers early Stage 2 | Prefers stocks near their highs |
| Best at | Avoiding bad stages and bad markets | Filtering to the strongest trends |
Neither is complete on its own. The Template can pass a stock in a sector that money is leaving, in a market that is turning down. Stage analysis can leave you with a long list of Stage 2 names with no precise way to rank them. Together they cover each other's gaps.
The VCP and the Stage 1 base
Minervini's volatility contraction pattern is a base in which each pullback is shallower than the last — say 25%, then 15%, then 8% — while volume dries up. Sellers are running out, and the stock is coiling before a breakout.
That is very close to what Weinstein describes as a good Stage 1 base, or a pause within Stage 2: a quiet range where selling fades, followed by a breakout on heavy volume. The VCP gives the base a sharper shape to look for; stage analysis reminds you to check that the 30-week line has turned up and that the market is helping.
What a breakout on volume looks like →
Using them together
- Market helping, sector strong — stage analysis's first two steps.
- Stock in Stage 2, early in the move.
- Passes the Trend Template — a strong, well-structured trend.
- A tight, quiet base — a VCP — with volume drying up.
- Buy the breakout on heavy volume, with a stop under the base.
Few stocks pass every line on a given evening. That is the point: the ones that do have the market, the sector, the trend and the setup all on their side.
Try it on Stage2StocksSee tonight's VCP candidatesTrend Template stocks whose range and volume are tightening — the measurable parts of a volatility contraction, with the criteria published in full.
Questions people ask
What is Mark Minervini's Trend Template?
An eight-point checklist from Minervini's book Trade Like a Stock Market Wizard. A stock must pass all eight — built on its 50-, 150- and 200-day moving averages, its distance from its 52-week high and low, and its relative strength — before he considers it. It is a gate, not a buy signal.
Is the Trend Template the same as Stage 2?
They aim at the same thing — a stock in a healthy uptrend — and most stocks that pass the Trend Template are in Stage 2. The Template adds stricter conditions on where the price sits in its yearly range; stage analysis adds the market and the sector around the stock.
What is a VCP (volatility contraction pattern)?
Minervini's name for a base in which each pullback is shallower than the one before and volume dries up — supply running out. It is close to what Weinstein describes as a quiet base before a breakout.