Quote from Reno:
Reviewing the charts of the watchlist stocks I can only say the majority look, in simple terms, fugly! How can these stocks such as TASR, FRD, SYNA, SNDA, CALM meet the criteria of RS >90 or be included in the watchlist after such horrendous breakdowns on the daily charts?
The stocks you mention above may no longer have an EPS or RS Ranking above 90, but they have made their way into the "Final Universe List. This list comprised of mostly tenured stocks contains many stocks that no longer meet the strict hershey criteria of EPS & RS, but do pass all other tests (EPS, Avg Volume, Rank, etc.) Each stock in the Final Universe List, at one time in the past, made it onto a daily "Hotlist," and as a result, into the Final Universe List. Removal from the Final Universe list only occurs when a stock fails to create a profitable trade
and fails to measure up in terms of float, EPS, or Average Volume. I create my daily Watch List from the combination of stocks in the Daily Hotlist and Final Universe List, that due to their volume levels, find themselves in one form of Dry Up or another.
Quote from Reno:
From reading the Hershey threads, I presume we would ideally like stocks that cycle 20+% 5 times in 6 months AND are in a sustained uptrend. Finding such stocks late in the bull cycle may be difficult without relaxing some criteria. Otherwise why not just look at liquid high beta stocks and perform the Hershey magic on these regardless of eps or rs rank since what may really be needed for this to work are stocks that move aggressively one way or the other. Not suggesting this by the way.
A few of the individuals that have shared their methods with the journal do use similar methods to those you suggested above. From what I understand, they experience good results. My understnading of the rationale behind the RS & EPS culling method involves the reduction of risk. According to Jack Hershey, seeking only the highest quality stocks as a base for our methodology reduces overall risk. For me, the trade-off between reduced risk and reduced profits remains one with which I am comfortable. While other methods of choosing stocks might improve profits, they carry with them an increased inherent risk. Since protecting my initial capital remains my top priority, the methods I use fit my personality quite well. Others with more risk tolerance, might prefer different methods and experience a high level of success using those methods. Neither method is 'more' correct over another. The choice remains one of personal preference.
Quote from Reno:
One more question for you. In selecting the zeros from the stocktables.com sort you select 10 centered on the zero level for Volume percent change however JH's method was to select the zeros by continuing up from the ones list at the bottom of the sort. Not that it makes any difference. Just trying to understand your method and reasoning behind it. For all I know JH changed his method in later posts and I just haven't gotten that far yet.
To tell you the truth, so much time has passed since I started culling in this fashion, I cannot recall where or when the change occurred. If memory serves, DKM may have posted a summery on the MSN web site, but I cannot recall for sure. For all I know, Jack may have spoken of it in the Paltalk Chat Room, and I simply made note of the change and moved on.
I recall much debate about the disconnect between the Stocktables.com list scores (sevens - ones - zeros) and the actual scores for the stocks. Manually calculating the 'scores' for each stock rarely matched with the stock's "List" score. From this I determined that teaching the stocktable.com method vs. teaching his tc2000 method made it easier for Jack to keep everyone on the same page while attempting to impart the spirit of his trading technique.
As a result, I have used the methods outlined in the journal and achieved a certain level of profitability. While I have yet to achieve the level of success experienced by Mr. Hershey, I continually test a variety of methods in an attempt to improve my overall results. To this end, the test culling list I post daily only contains stocks that meet every Jack Hershey fundamental Criteria - including RS and EPS rank greater than 90. I hope to add to this list a theory that Dry Up Volume exists in a range rather than an absolute number. I hope to determine if altering the methodology in this fashion brings me closer to achieving the spirit of Jack's teachings and his level of success.
I appreciate your suggestions above, and hope my answers helped to explain any confusion resulting from the methods I use. When time permits, I will attempt to test your suggestions to determine how using your suggestions might alter my equity curve. Thanks again for your input and for the contributions you have made to the journal.
- Spydertrader
