Quote from svrz:
So are you applying the Hershey principles in reverse when shorting stocks?
In a manner of speaking, yes. If we look at Jack's Jokari Window, we see that falling price with rising volume allows us to anticipate a trend continuation. We apply this axiom to our long positions each day. With shorting, we still look for trend continuation, but we look to have that continuation occur in the opposite direction. IF one looks to short Hershey Equities, once a volume trigger occurs, we look for our indicators to confirm an opposite view from our decision-making with regard to entering long positions. As a result, we want falling price, negative MACD, and a Stochastic Indicator
below 20. Also, the 25% pro-rata volume levels normally work better for shorting - allowing one to enter the trade with the first down move normally occurring in the early morning. With EZPW, I simply neglected (read forgot) to set a 25% pro-rata volume alert, and as a result, missed the first signal on EZPW for the morning.
Quote from svrz:
If I understand correctly, this stocks was selected out of the Hershey Universe, no?
Correct, I select each stock to trade from our daily Watch List. The daily Watch List comprises equities from our Final Universe List (Hershey Universe) that find themselves "in dry up" the day before.
Quote from svrz:
Furthermore, do you have short candidates every morning before the market opens?
No, I do not have a list of "short candidates" assembled before the market opens. Each morning, I look to enter into a long position. However, I can only trade what the market provides. When market dynamics fail to provide tradeable signals from the long side. I immediate evaluate the volume signal to determine if it falls within the desired parameters for shorting.
Quote from svrz:
How profitable are these shorts during the up markets?
Just as the long signals occur with less frequency and strength in falling markets, so too do short signals occur with less frequency and strength in rising markets. Because of the increased risk associated with shorting high quality stocks such as Hershey Equities, I have rarely held a short beyond EOD. Since beginning the Journal last September, the short trades have outperformed the majority of long trades - meaning the shorts have more frequently achieved or exceeded our target goal of 10%. However, I have had significantly more signals to trade from the long side since the Journal began, and thus, more profits generated from long trades.
Quote from svrz:
Thanks and take care.
You are most welcome, and thank-you again for your contributions to the Journal.
Disclaimer:
Jack Hershey has written very little regarding shorting Hershey Equities. Due to the limited 'shorting' information available from Jack Hershey, the methodology used for shorting resulted from email conversations between myself and a fellow trader residing in Belgium, and not, directly from Jack. As a result, I continue to place the majority of my focus within this Journal on trading from the long side. Because of the inherent added risk associated with shorting any equity, those individuals new to trading in general, or new to trading Hershey Equities in specific, should continue to focus on trading from the long side until they possess a thorough understanding of the methodology involved.
