/sepa-strategy

name: sepa-strategy
description: >
  Analyze stocks with Mark Minervini's SEPA (Specific Entry Point Analysis) methodology:
  stage analysis, the 8-condition trend template, fundamentals, VCP and other base
  patterns, pivot-point entries, market environment, and risk-based position sizing.
  Use this skill whenever the user mentions SEPA, Minervini, superperformance, the
  trend template, VCP (volatility contraction pattern), Stage 2, pivot or breakout
  entries, moving-average stacking (price above the 50/150/200-day MAs), breakout
  volume, position sizing from risk percentage, growth-stock screening or swing-trade
  entry criteria, or bases such as cup-with-handle, flat base, bull flag, or high tight
  flag. Also use it
  when the user asks "should I buy this stock" or "is this a good setup" about a
  growth or momentum name, or shares a chart for pattern analysis.

SEPA Strategy Analysis

Analyze stocks using Mark Minervini's SEPA (Specific Entry Point Analysis) framework — a complete system for identifying high-probability growth stock entries with strict risk management.

**Core philosophy:** Buy the right stock, in the right stage, at a precise entry point, with strict risk controls. Win rate is ~50-55% — profitability comes from asymmetric risk/reward (small losses, large gains), not from predicting direction.

> This skill is for educational/analytical purposes only. It does not constitute investment advice. Never execute trades based solely on this analysis.

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Step 1: Gather Stock Data

Collect the following data for the stock. Use yfinance or any available market data tool.

| Data needed | Purpose | |---|---| | Current price | Trend template check | | 50-day, 150-day, 200-day moving averages | MA alignment verification | | 52-week high and low | Price position check | | 200MA value from 1 month ago and 4-5 months ago | MA200 slope direction | | 20-day average volume + today's volume | Volume ratio analysis | | Recent quarterly EPS (last 3-4 quarters) | EPS growth & acceleration | | Annual EPS (last 3 years) | Long-term growth trend | | Recent quarterly revenue (last 3-4 quarters) | Revenue growth check | | Gross margin and net margin trend | Margin health | | Institutional ownership changes (if available) | Smart money signal | | RS rating or 12-month relative performance vs S&P 500 | Relative strength | | Price history for pattern recognition | VCP / chart pattern analysis |

Compute the moving averages, 200MA slope, 52-week range, volume ratio, and relative performance from daily price history in code rather than estimating them — two years of history covers the 200-day MA and its 5-month slope.

If certain data is unavailable, note it and proceed with what you have. Missing RS rating is a significant gap — flag it.

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Step 2: Stage Analysis — Identify the Current Stage

Every stock cycles through four stages. Read `references/stage-analysis.md` for full details.

Determine which stage the stock is in:

| Stage | Characteristics | Action | |---|---|---| | **Stage 1** — Basing | Price near 200MA, MA flat/declining, MAs tangled, low volume | Do nothing, wait | | **Stage 2** — Advancing | Making higher highs/lows, bullish MA alignment, volume on up days | **Only stage to buy** | | **Stage 3** — Topping | Wide swings at highs, frequent false breakouts, heavy volume without progress | Reduce, no new positions | | **Stage 4** — Declining | Below all MAs, bearish alignment, bounces are selling opportunities | Full cash, stay away |

If the stock is NOT in Stage 2, stop here and tell the user. No further analysis needed.

Within Stage 2, count the base number (how many consolidation-then-breakout cycles have occurred):

• **Base 1-2**: Safest, most upside potential — full position
• **Base 3-4**: Still valid but reduce position size
• **Base 5-6**: Late stage — half position at most
• **Base 7+**: Avoid — likely transitioning to Stage 3

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Step 3: Trend Template — 8 Mandatory Conditions

All 8 conditions must be met simultaneously. If any fails, the stock does not qualify. Read `references/trend-template.md` for detailed explanations.

Present results as a checklist:

| # | Condition | Status | Value | |---|---|---|---| | 1 | Price > 150MA and Price > 200MA | Pass/Fail | [actual values] | | 2 | 150MA > 200MA | Pass/Fail | [actual values] | | 3 | 200MA trending up for ≥1 month (ideally 4-5 months) | Pass/Fail | [slope data] | | 4 | 50MA > 150MA and 50MA > 200MA | Pass/Fail | [actual values] | | 5 | Price > 50MA | Pass/Fail | [actual values] | | 6 | Price ≥ 30% above 52-week low | Pass/Fail | [% above low] | | 7 | Price within 25% of 52-week high | Pass/Fail | [% from high] | | 8 | Relative Strength > 70th percentile (prefer 85-90+) | Pass/Fail/Unknown | [RS if available] |

**Memory aid:** Conditions 1-5 = "MA staircase" (Price > 50MA > 150MA > 200MA, 200MA rising). Conditions 6-7 = "Price position" (far from low, near high). Condition 8 = "Relative strength" (market leader).

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Step 4: Fundamental Check

Strong fundamentals separate real leaders from momentum-only stocks. Read `references/fundamentals.md` for thresholds and rating criteria.

Check these in order of importance:

1. **Quarterly EPS growth ≥ 20%** (prefer 25-50%+). Below 20% = disqualify. 2. **EPS acceleration**: Current quarter growth > prior quarter growth. Deceleration (even with positive growth) is a warning. 3. **Annual EPS growth ≥ 25%** for each of the past 3 years. 4. **Revenue growth ≥ 15%** annually, ≥ 20-25% quarterly preferred. If EPS grows but revenue doesn't, the growth is likely from cost-cutting (unsustainable). 5. **Margin trend**: Gross and net margins stable or expanding = healthy. Contracting margins even with EPS growth = red flag. 6. **Institutional ownership increasing**: Smart money accumulating = fuel for Stage 2 move. 7. **Catalyst**: New product, FDA approval, major contract, market expansion, etc. Stocks with catalysts can run 50-100%+; without, typically