Spydertrader's Jack Hershey Equities Journal

[mlsignups]

Here's a question that popped into my mind this morning.....

As I understand it having read and reread this thread and others over the last few weeks, the core strategy starts by picking 30 stocks from the Stocktables list.

Here's my question. Assuming all 100 stocks (or so) have good RSI and EPS values, did Jack originally pick only 30 because it was a managable number since he did most of what he did manually, or is there some statistical reason to do so. For instance, do we think that the middle 70 are in a different part of the 1-7 cycle? Or could it be that more of the stocks from the top and bottom would qualify but he originally picked 30 just to have a managable list (which may not be necessary any more since our DU screening is computerized)? In other words, is it possible we'd do well with all 100 or 50 of the 100 instead of the 30 since we don't have to do everything manual any longer?

Just a thought. I don't know if anyone has explored this or not?

Mike

 

[Spydertrader]

Quote from mlsignups:

For instance, do we think that the middle 70 are in a different part of the 1-7 cycle?

Yes, stocks located in different parts of the stocktables.com initial sort (theoretically) have different 'scores.' The thirty stocks (three lists of ten stocks [sevens - ones - zeros]), correspond to 'scores' by their location on the stocktables.com initial sort. This is the reason behind sorting by "Percent Volume Change." As DKM pointed out in his post on the MSN Web Site, a stock's 'Score' based on its (seven - one - zero) list fails to correspond well to its score using the PVAD Formula. As a result, I recently added the "Test Culling Method" to my daily lists. This method skips the three list creation step, and creates a HotList from ALL stocks in the stocktables.com initial sort. Several other traders that follow this thread have implemented testing of the "Test Culling Method" as well.

Since my iteration of the Hershey Methodology involves the creation of a Final Universe List out of each daily (and previous day's) Hotlist, the "Test Culling Method" may serve to increase the number of trade signals over a longer time frame. However, the theory still requires additional testing.

- Spydertrader

 

[izeickl]

Spydertrader, I have only just started going over your thread in the past few days so not fully upto speed on changes you have made to the original Hershey teachings and method posted on the first page. Although I started to use his methods ages ago I never followed through fully due to external factors so although I knew the process never got to the point of trading it. Would it be possible to do a quick run down on what parts you are refining/testing varying methods compared to your initial post? As I read above you are testing using all stocktables data using the PVAD formula rather than the 701s list creation.

 

[Spydertrader]

Quote from izeickl:

Would it be possible to do a quick run down on what parts you are refining/testing varying methods compared to your initial post?

Welcome Back Izeickl. I had mentioned your name a couple of days ago in regard to your Hershey Amibroker Code you sent me 2 years ago. Glad to see you still follow the markets.

Only a few minor changes have been implemented since the beginning of the Journal. Occasionally, I alter the EPS and RS settings to retrieve the correct number of stocks for the initial sort. Also, a newer version of the Wealth-Lab Chartscript for ranking stocks now exists. The new version more accurately calculates score, and provides a Dry Up Volume range. Additional updates to the v2.0.1 Chartscript include: altering the chart background for easy identification of Dry Up Stocks and exporting information to a Commentary Window to avoid main chart pane clutter.

The "Test Culling Method" referred to above, eliminates the creation of the three lists (sevens - ones - zeros) prior to the formation of a Daily Hotlist. I post daily the results of creating a Hotlist with this method, as well as, the methods outlined in the beginning of the Journal. Also, SRVZ shared seven equations he coded into Wealth-Lab Developer by translating Jack's old equations (also posted in the thread). I include the results of those scans in my daily post as well.

I currently track four different methods of Dry Up Volume calculation in an effort to determine which of the methods most accurately provides trading signals. Unfortunately, no one method has yet to outperform another by any statistical significance. As a result, The use of Dry Up Range (In The Wealth-Lab Chartscript v2.0.1) may hold the key to more closely resembling Jack Hershey's eyeball method.

Lastly, I now maintain a "Final Universe List" created from each Daily Hotlist. The Final Universe contains stocks that made a Hotlist some time in the past and have continued to maintain their 'rank' average volume, and correct float or have developed "Tenured Stock" status from a past profitable trade. The Final Universe List resembles Jack's list of Tenured Stocks, and I evaluate it daily for stocks in a Dry Up Level of Volume.

Again, welcome back, and you can find Jack posting again under the handle Grob109.

I hope that helps.

- Spydertrader

 

[Spydertrader]

2005-03-23, Wednesday - Update

Our system failed to generate any signals today, as actual volume failed to exceed calculated Dry Up Volume for any of our Watch List Stocks. SNDA appeared to start to make a large move, but volume failed to maintain its early morning pace. As a result, actual Volume for SNDA failed to exceed appropriate levels for signal generation.

- Spydertrader

 

[Spydertrader]

2005-03-24, Thursday - Lists

I used RS Setting of 90 and EPS Setting of 80 for the following lists

Stocktables.com
Sevens - Ones - Zeros
LB - XXIA - TOPT
IRIS - FLSH - LCAV
TU - URBN - MEE
ISSC - AAPL - WLL
FTO - ISRG - CMC
ANTP - BEBE - AKS
CMTL - MUSA - WFR
FORD - MHR - CENX
AFFX - DHC - ELOS
ADM - WWCA - PMTI

Wealth-Lab Chartscript/Manual
Hotlist

FORD
ANTP
XXIA
ELOS
TOPT

Wealth-Lab Data/Yahoo Data
Watch List

CUTR - DU Cycle - DU5
TASR - DU Cycle - DU5 - DU10
FRD - DU Cycle - DU5 - DU10
SYNA - DU Cycle
MFLX - DU Cycle
BCSI - DU Cycle - DU5
MIPS - DU Cycle
SIGM - DU Cycle
SINA - DU Cycle - DU5 - DU10
SPTN - DU Cycle
SNDA - DU Cycle - DU5 - DU10
FFIV - DU Cycle - DU5
KEYW - DU Cycle - DU5
ULBI - DU Cycle

Wealth-Lab Developer Data & Equations/G33M4K Equations
SRVZ Wealth Lab Equations - Dry Up (with G33M4K Score)

SYNA - 0

Eyeball
Gallas2 "Keep an Eye on These" Stocks

SPTN (Attached)

Yahoo Data/G33M4K Equations
Dry Up Stocks with G33M4K Master List Score of Zero

FRD
TASR
MFLX
SPTN
KEYW

Wealth-Lab DU Volume Range - Hershey V2.0.1 / QCharts Data
Dry Up Stocks and G33M4K Master List Score

FFIV - 0
SINA - 1
SPTN - 0
TASR - 0

Stocktables Sort/Qcharts/G33M4K Equations/
Test Culling Method with Score Hotlist

GDP 0
KEYW 0
PARL 0
PGIC 0
XXIA 0
DCAI 1
MFLX 2
PMTI 2
SGTL 2
TOPT 2
TRGL 2
ELOS 5
FORD 5
MIPS 7

ANTP failed to make the Final Universe List due to insufficient float.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=712571>

 

[Spydertrader]

2005-03-24, Thursday - Update

Our system generated three signals all within ten minutes of each other this morning. Actual volume exceeded 50% pro-rata volume for KEYW, CUTR & TASR between 10:00 AM and 10:10 AM EST. Signal generation for KEYW occurred at 10:02 AM. However, we did not have price improvement ($17.44, down .14 from previous day close). As a result, I take no action with regard to trading KEYW either long or short.

Actual volume for CUTR exceeded the 50% pro-rata level for Dry Up Volume at 10:03 AM EST. With CUTR, we do have price improvement ($18.55 USD at time of signal generation). Both MACD (+.0532) and The Stochastic Indicator (96.1275) fell within desired parameters. As a result, I entered into a Long position with a 500 share market order of CUTR.

03/24/05 10:07:07 18.55 18.50 18.55 500

Our third signal of the morning resulted from actual volume of TASR exceeding the 50% pro-rata level of Dry Up Volume at 10:10 AM. Once again, we did not see price improvement ($11.73, down .77 from previous day close). As a result, I take no action with respect to TASR either long or short.

We have set our stop ($17.62 USD), at 5% of the purchase price ($18.55 USD), and plan to move the stop up if price continues in our favor. Our normal Target price of 10% places our target at $20.40 USD. However, we may encounter some resistance at our most recent high ($19.87 USD occurring on 03-16-2005). As a result, we will hold off placing our target price above the possible point of resistance until such time we anticipate trend continuing beyond this level.

- Spydertrader

Edit: I had to clarify the purchase price, as the original language sounded confusing after rereading my post.

 

[Reno]

Hello Spydertrader,

Wealthlab Hershey Equities Rank V 2.0.1. chartscript did not return a value for rank or dry up volume calculation for KEYW. I was wondering where you got the value you used for monitoring today's trading in KEYW.

If utilizing the chartscript output, which value of DU do you prefer to watch, the average DU or Upper or Lower band, or none of these if you now prefer a different method for DU calculation?

Thank you.

 

[Spydertrader]

Quote from Reno:

Wealthlab Hershey Equities Rank V 2.0.1. chartscript did not return a value for rank or dry up volume calculation for KEYW. I was wondering where you got the value you used for monitoring today's trading in KEYW.

If utilizing the chartscript output, which value of DU do you prefer to watch, the average DU or Upper or Lower band, or none of these if you now prefer a different method for DU calculation?

You correctly observe the loss of Rank experienced by KEYW just over a week ago. We don't normally trade stocks without rank unless they have a 'Tenured Stock' status. KEYW doesn't have Tenured Stock Status. As a result, I plan to delete KEYW from the Final Universe List during my monthly 'cleaning' process. Each day, I calculate four separate methods of Dry Up Volume using equations previously posted to the Journal. Today, volume for KEYW exceeded both the DU5 and DU Cycle Methods for Dry Up Volume Calculation.

Use of the Hershey Equities Rank V 2.0.1 still finds itself in the testing and evaluation phase. However, I envision using the Lower Band (or 50% pro-rata of the Lower Band) to trigger a possible trade, and using both Average DU and High Band for confirmations along with FRV at EOD.

I apologize for any confusion resulting from my previous explanations.

- Spydertrader

 

[Spydertrader]

Quote from Reno:

My question regarding CUTR concerns the Stochastic values. With Tradestion, my values for stochastics (slow and fast 14.1.3) were both < 75 at the time (10:05 a.m. EST 5min chart) and I therefore did not act on the signal. I do not understand the difference between our stochastic values unless it is a data problem with tradestation. Comments?

I monitor using a thirty minute chart and then drop down to the 10 minute fractal to determine entry. When I dropped down further to look at a 5 minute chart to compare your signals to my own, I see a Stochastic Level of 78. In addition, differences in our data sources may account for the variations.

Quote from Reno:

(I am just starting to get familiar with quotetracker and I see that the stochastic calculated from Schwab data for CUTR at the time of signal was above 80, hmmm!)

As I suspected, variations in data sources often account for the differences in what individual charts show. For this reason, some traders have altered their use of Stochastics to include trades above 75 rather than 80.

Quote from Reno:

Thank you for your continued excellent work.

Thank-you for your continued contributions to the Journal.

- Spydertrader