The stock collapses. Most "value investors" lose money here by trying to catch a falling knife. The VCP Pattern: Timing the Breakout
“You don’t have to be right often; you have to be right big when you are.” – Mark Minervini trade like a stock market wizard by mark minervini
This is Minervini’s most famous contribution to technical analysis. The paper explains the mechanics of supply and demand. It illustrates how a stock goes from a chaotic, volatile state to a calm, consolidated state. It explains why "low volatility" setups often precede explosive moves. The stock collapses
Minervini argues that explosive moves are born from periods of contraction. By identifying periods where volatility shrinks (VCP) and supply is absorbed by strong hands, a trader can enter a position where the downside is capped (tight stop loss) but the upside is open-ended (momentum explosion). This creates a "Superperformance" trade. The paper explains the mechanics of supply and demand