Spydertrader's Jack Hershey Equities Journal II

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Quote from foible:

Not sure what my feelings are towards those that entered on a DU breakout and held. I'm glad they got rewarded, but think they could get burned in the future. Dunno. Given similar circumstances, I would exit every time.
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Perhaps, those that held felt price had formed a lateral over the last two days, and with rising MACD and intertwining Stochastics (14,1,3), anticipated a breakout to the high side.

- Spydertrader

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=1227887>
 

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wasn't able to trade yesterday as i had other things that needed attention. made a little today on SMSI and started a position in GIGM.

though vol collapsed, i'm holding to re-evaluate in the AM. it looks as if it has possibilities. this is another stock similar to GROW where DU may be distorted due to heavy volume over the last few weeks. MACD just turning green, Stoch just heading up and starting to diverge, volume increasing from a possible "DU" though not the breakout i was looking for.

we'll see what tomorrow brings.
 
Hi SyderTrader,

I'm a newbie to the Hershey's method and your thread. I spent quite a bit of time to study the method and read your 2 threads. Great stuffs.

I recently studied your final universe posted on page 606 of this thread.
<<
ALJ ANDE BTUI CBEY CMED COGO CTRN DTLK DXPE EZPW FTEK GIGM GMXR GROW IAAC IIIN ININ JOBS MGPI MIKR NEU OMNI RACK SMSI TIE TWPG TXCO XING
>>
I found some of the stocks that are in your Final Universe have very low EPS and RS rating, according to StockTables.com. For example ALJ today’s EPS and RS score are 45 and 36 respectively. I checked ALJ’s historical RS. It's RS rating was very high until mid September. I’m pretty sure ALJ was picked when it was high in both the EPS and RS rating. However, according to Jack Hershey, “only the quality of equity will minimize the risk”, and only those with high EPS and RS rating should be considered.
I’m sure there must be reasons why a stock like ALJ should still be kept in the your FU. Can you please help me to understand them?

Also, since the logic behind the initial screening (so to generate the IU and hot list) is to find stocks of highest quality, what’s your opinion on trading Hershey’s based on the IBD100?

Thank you.
 
Quote from 10k1d:


I’m sure there must be reasons why a stock like ALJ should still be kept in the your FU. Can you please help me to understand them?
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This has been answered a number of times in both the journals. It would be to your benefit to review them again.

The only reason Spydertrader removes a stock from the final universe is failure to maintain rank.

Good trading to you
Anthony
 
Quote from 10k1d:


I’m sure there must be reasons why a stock like ALJ should still be kept in the your FU. Can you please help me to understand them?

Also, since the logic behind the initial screening (so to generate the IU and hot list) is to find stocks of highest quality, what’s your opinion on trading Hershey’s based on the IBD100?

Thank you.
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Actually i think this is a valid questoin. Since we are going after hi quality stocks shouldn't a stock that looses its RS and EPS rank be removed? If not, why not just scan all stocks and just find the ones with hi rank and by pass this whole EPS/RS deal?
 
Quote from rickylc:

wasn't able to trade yesterday as i had other things that needed attention. made a little today on SMSI and started a position in GIGM.

we'll see what tomorrow brings.
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Looking at the EOD charts from today, I see the same as you in terms of GIGM.

EZPW and BTUI also look like good candidates if price and volumes improves. I like how both seem to be at the bottom of their respective channels(IT).
 
Thank you Aweissen and Switch for your reply. I understand Sydertrader takes a stock out of the FU only upon its lose of ranking. I was trying to figure out why fundamental shift is less important at this phase of the process (namely FU cleanup). As I mentioned, I'm still a student of the method. I do worry about misunderstanding some important concept here.


Quote from switch:

Since we are going after hi quality stocks shouldn't a stock that looses its RS and EPS rank be removed? If not, why not just scan all stocks and just find the ones with hi rank and by pass this whole EPS/RS deal?
More...

And Switch put up the question a lot better than I did. :)

Thank you.
 
As we gather stocks to trade, using the EPS and RS ranking ensures that they are of high quality.
In the beginning, this is critical to add it to our lists, as the stock progresses forward in time what is of true value to us becomes the cycling nature of the equity rather than it’s current fundamentals. Once we have traded that stock several times we begin to pick up on the unique characteristics of it, as that occurs our focus leads us to maintaining rank rather than maintaining high fundamentals. Time and Experience allow for the realization that as beginners we need the quality aspect to ensure positive or long potential, creating a strong bias for the equities to perform in a long direction, (long foundation). As each person builds the knowledge and experience aspect, it becomes more a focus on performance of cycles and maintaining rank which lead to money making possibilities than it is fundamentals.

New stocks are filtered in to the universe using all the criteria layed out in the first pages/ last page of Journal I.

A beginners view…. HTH

Regards

EX
 
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