Spydertrader's Jack Hershey Equities Journal

[svrz]

Quote from Spydertrader:

2005-04-18, Monday - Update

Our system triggered a trade signal this morning when actual volume on FORD exceeded calculated Dry Up Volume at both the 25% and 50% pro-rata levels. We did not see price improvement ($11.41, down $1.24 at time of signal generation). MACD held at negative levels (-.1789), and The Stochastic Indicator (28.1376) fell outside our desired parameters. As a result, I took no action (either long or short) with respect to trading FORD.

- Spydertrader

Any reason as to why GDP did not signal a trade according to your analysis? It seems that it met most of the criterias.

Thanks in advance.

 

[Spydertrader]

Quote from svrz:

Any reason as to why GDP did not signal a trade according to your analysis?

Using Qcharts data, actual volume for GDP failed to place it "in Dry Up" on the day before (Friday). As a result, GDP didn't make the Watch List for Today.

- Spydertrader

 

[svrz]

Quote from Spydertrader:

Using Qcharts data, actual volume for GDP failed to place it "in Dry Up" on the day before (Friday). As a result, GDP didn't make the Watch List for Today.

- Spydertrader

Are you using the low DU band as the minimum criteria?

 

[Spydertrader]

Quote from svrz:

Are you using the low DU band as the minimum criteria?

I apologize for not making my previous answer more clear. Before one gets to the point of analysis of trade signals to determine if one should enter into a trade, we need to cull our universe down to a specific subset of stocks to monitor. If you use the "Dry Up Range" Chartscript (Version Two), you create a list of stocks with low volume compared to their normal cycle. These stocks are said to be "In Dry Up" and would equate to our daily Watch List of stocks. Such stocks turn the background green (in the Hershey Chartscript) to clearly indicate a stock that has an actual volume which places it "In Dry Up." We define "In Dry Up" several different ways. Using the Hershey Chartscipt Version Two, any stock with an actual volume less than the high band of Dry Up Volume is said to be "in Dry Up' on the day before. Over the weekend, out of all the stocks in our Final Universe List, only two stocks met this criteria - TASR & TRGL. As a result, we would only monitor these two stocks.

Currently, I still create the daily Watch List from our Final Universe List by checking each stock to see if any, of the four methods I described in previous posts, calculates a stock to be "In Dry Up" based on its previous day volume. Using the Hershey Chartscript or using my default daily methods failed to indicate GDP had actual volume which would have placed it "In Dry Up." I do not monitor stocks that are not "In Dry Up" the day before.

If a stock were to find itself "In Dry Up" the day before, one could use actual volume crossing the low band of the chartscript to indicate a trade signal. One could then use average Dry Up as a confirming indicator (as well as FRV). However, additional testing and analysis is required before I can definitively say which methodology produces superior results.

I hope my answer above helps to eliminate any confusion resulting from my previously posted response.

- Spydertrader

 

[acesheet]

Spyder,

This is an extremely interesting method to me as a product of my own observations and study I started looking for stocks with what I called "bone dry" volume in the bottom of a price base about a year ago. I had noticed that this was a very common characteristic of big winner stocks. I have primarily used CAN SLIM without much success, though that's largely due to my own psychology.

In any case I've been following this thread with some interest and have been trying to develop tools to use the Hershey concepts. Incidentally, a lot of Jack's work and conclusions regarding compounding and natural cycles parallel those of J.M Hurst whose methods outlined in "The Profit Magic of Stock Transaction Timing" I've been studying lately.

I've been using MSN's stocks screener, Stocktables.com and my own spreadsheet called the Acesheet to screen for the Hershey stocks. I have a question as I noticed something strange during my screen for the 100+/- candidates on 4/13-4/14. Then I noticed the same thing on your posted list for 4/14. It seems that the three give a fair number of similar stocks though the lists are not always the same.

When I ran and sorted the MSN screener candidates I had quite a bit of overlap in the 0,1,7's particularly in the 7's and 0's groups of 10 stocks. I notice that your 7's list from 4/14 (post 665) shows a number of dashes. Is this due to overlap in the groupings? What's your rule of thumb for what to do in this instance? As I said my screening showed similar characteristics using MSN's screener.

I'm an Amibroker user and pretty fluent in Excel as well so I'm hoping to help contribute a bit this board. Its probably the most productive one I've seen on ET after scanning the field of threads. Good work.

-ace

 

[Spydertrader]

Quote from acesheet:

I notice that your 7's list from 4/14 (post 665) shows a number of dashes. Is this due to overlap in the groupings? What's your rule of thumb for what to do in this instance?

Welcome to The Journal Ace. As you no doubt have observed, we welcome any input and observation. I continue to encourage contributions from interested individuals. Again, welcome aboard.

You correctly observe the many similarities existing between William O'Neil's CANSLIM Method and The Jack Hershey Equities Method. These similarities arise from the initial sort of stocks in the Hershey Universe. By seeking "high quality stocks" and using RS and EPS rankings of between 80 and 90, we often end up monitoring and trading the same stocks as those following CANSLIM. This is a good thing as the rising tide of CANSLIM traders often pushes our trades well into the profit category.

To answer your specific question: Yes, the dashes represent overlap in stocks. This overlap occurs occasionally when the number of stocks in our initial three list sort falls below a certain level (e.g. not enough stocks with rising volume and rising price). When I see this occurrence, I attempt to delete the overlap from an appropriate category manually based on its PVAD relationship. However, due to my variations on the Hershey Methodology (creation of a Final Universe List) these occasional overlaps don't present a problem. In fact, some individuals skip this step entirely (The current positing of the "Test Culling Method") creating a Hotlist from the initial stocktables.com sort without making three lists (of sevens - ones - and zeros).

If the stock that experienced overlap isn't already in the Final Universe List, we add it just as we would with any other stock meeting our culling parameters (EPS, float & avg. volume). I check the Final Universe each day to determine which of these stocks meet the specific criteria for monitoring and trading.

When Jack first began teaching the stocktables.com Version of his methodology, he used the creation of the three lists in order to aid the trader new to his methods in determining a 'score' for each equity. As DKM pointed out (2 years ago) on the MSN Web Site, the score for a stock based on its list position, and the score calculated using the PVAD relationship, doesn't always correspond well. As a result, I now use G33M4K's Master Scoring Sheet (v.18) or The Hershey Chartscript Version Two to automate the scoring process.

I hope you find the above helpful.

- Spydertrader

 

[traderjim22]

Quote from Spydertrader:

2005-04-18, Monday - Update

Our system triggered a trade signal this morning when actual volume on FORD exceeded calculated Dry Up Volume at both the 25% and 50% pro-rata levels. We did not see price improvement ($11.41, down $1.24 at time of signal generation). MACD held at negative levels (-.1789), and The Stochastic Indicator (28.1376) fell outside our desired parameters. As a result, I took no action (either long or short) with respect to trading FORD.

- Spydertrader

Hi Spydertrader,

Thanks for the great work!

I'm trying to follow this thread and paper trade for a few weeks before jumping in with real $$$.

This morning, according to my setup, FORD did trigger a short signal. On my 30 min. chart, at the end of today's first bar, I have MACD at -0.28, Stochastic slow %K at 12.29, and slow %D at 11.29 (I'm using Sierra Chart's Slow Stochastic indicator with the following parameters: 14 for Fast %K, 1 for Fast %D/Slow %K, 3 for Slow %D, simple moving avg.) Is this the same setting as yours? I wasn't watching at the time the volume alert went off, but if my reading is correct, these numbers did signal a short at around $12.20, right?

BTW, FORD would have been a great short, producing 10%+ profit in one day!

Thanks again to all who contribute to this thread.

TJ

 

[Spydertrader]

Quote from traderjim22:

Is this the same setting as yours? I wasn't watching at the time the volume alert went off, but if my reading is correct, these numbers did signal a short at around $12.20, right?

Your settings appear correct, and based on the indicators as you saw them, you did receive a trade signal today with FORD. Although your readings for MACD and The Stochastic Indicator differ slightly from my own, I feel confident in attributing these differences to the use of different data providers. We have seen these differences many times in the past. Sometimes the differences keep you out of a bad trade. Other times (like today) the differences keep you out of a good trade. It all evens out in the long run.

I've attached an intraday chart of FORD using the 30 minute timeframe to illustrate the chart patterns normally seen with shorting Hershey Equities. Notice the early morning drop followed by a flat midday period. In the afternoon, price continues its downward trend.

- Spydertrader

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=730731>

 

[Spydertrader]

2005-04-19, Tuesday - Lists

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

Stocktables.com
Sevens - Ones - Zeros
MACR - HP - AEOS
USPI - IPS - FORD
SNHY - XXIA - MCRI
VMSI - JLG - HUM
AAPL - CDIS - APCS
CCJ - JOYG - LI
JOSB - USNA - CYCL
AFFX - VPI - CMTL
USG - MDRX - NXTP
SYXI - WWCA - PTEN

Wealth-Lab Chartscript/Manual
Hotlist

FORD
XXIA
USG
MCRI

Wealth-Lab Data/Yahoo Data
Watch List

DCAI - DU Cycle - DU5
TASR - DU Cycle - DU5
FRD - DU Cycle
EXM - DU Cycle
MFLX - DU Cycle - DU5 - DU10
SIGM - DU Cycle
SNDA - DU Cycle - DU5 - DU10 - DU20
CUTR - DU Cycle
CALM - DU Cycle
BCSI - DU Cycle

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

No Stocks Qualified

Eyeball
Gallas2 "Keep an Eye on These" Stocks

UBET (Attached)

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

DCAI
TASR
MFLX

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

MFLX - 0
SNDA - 1
TASR - 0

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

DCAI 0
MFLX 0
FFIV 1
XXIA 1
ELOS 2
FORD 2
TRGL 2
GDP 5
MCRI 5
USG 5

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=731031>

 

[Spydertrader]

2005-04-19, Tuesday - Pre-Market Update

http://tinyurl.com/dobtj

TASR already trading around 12% lower in pre-market activity due to significantly lower earnings.

- Spydertrader