Spydertrader's Jack Hershey Equities Journal

[Lefty62151]

Hello:
I looked through your thread and tried to read through Mr. Hershey's posts. First I want to offer you my congratulations. I think I am of above average intelligence. But the majority of Mr. Hershey's comments are, as far as I can see, unintelligible. Perhaps I am not as intelligent as I thought

As to the system that you have put together, I want to offer a couple of thoughts. First on the subject of "dry up volume". Looking at the variation of DRV, it is clear that the concept has merit, however Mr. Hershey did not, or does not have a way to reliably determine that level. It is likely that DRV varies with each stock that you follow, and with time. If for instance, the stock becomes well known, that process will affect the number of market participants who will want to transact in that issue. If it is a listed stock, the market maker will at some point have to adapt to changes in volume as well. I am just putting forth an example. There are several other issues that probably affect DRV, making it difficult to determine accurately.

As regards Mr. Hersheys "target" of 10% every several weeks. Based on the record I see in this thread, you would need to put on positions that violate your money management rules to obtain that result.

On the positive side, the idea that a trader might be able to cull from a universe of stocks, down to a tenured list and find candidates that move in predictable channels is interesting. I do something similar, looking at the way that volume changes prior to during and after events such as earnings, or economic reports.

I think you have done a great job of adding value to a body of work that ordinarilly would be ignored. Thanks, Lefty

 

[nwbprop]

Quote from Spydertrader:

My mistake. I hope this is what you were looking for. See attached.

- Spydertrader

My chart looks slightly different then yours. Daily UBET chart.

 

[g33m4k]

Quote from Spydertrader:

I will be heading west to enjoy a last minute vacation in the mountains (and golf courses) of Arizona Sunday afternoon. As a result, I will not have access to a computer to post the daily lists until Saturday, October 23, 2004. I encourage continued involvement in the Journal and with the ongoing process of 'iterative refinement' in my absence. I will 'catch up' upon my return.

...

- Spydertrader

Spyder... My continued compliments to your excellent effort. I will try to be more productive in your absence.

Regards,
G33M4K the Newb

PS
Finally figured out my password/email combo
for this account... LOL...

 

[g33m4k]

Quote from Lefty62151:

Quote from makosgu:
Thaks for your comments. I find them extremly interesting... I am particular curious about the reasons for a 6 period ROC of MACD as opposed to a single period?

Well, by definition, MACD uses two MAs. Hence the reason for the double period and not single. Or perhaps I completely misunderstood your question?

I am sorry. I misunderstood your initial response. The initial response had stated...

Quote from svrz:

Unfortunately this is not very useful. If you, say, plot the 6 period ROC of MACD(5,13), you will see a near straight line with a few peaks that correspond to nothing useful.

I had read this as using a ROC(MACD(5,13), 6) instead of ROC(MACD(5,13,6)). I want to clear any confusion I had started in that the terms I am using are the mathematical terms. I am completely brand new to this world of investments so things like indicators and oscillators are things which I do not understand yet. For example, why is Stochastics called stochastic? Stochastic in mathematical terms indicates that a completely random component is in every single value of the function. Is stochastic a misnomer??? So when I state Rate of Change, I am referring to the calculus term change in y change in x (y=Price,x=time), not the indicator term. My apologies svrz .

Quote from makosgu:

Is there some sort of uncertainty principle boundary that I am fighting against???

My apologies again. The uncertainty principle is a physics constraint discovered and quantified by Heisenberg. It states that there is a physical limit to how accurately one can measure the momentum AND position of a particle. To increase the accuracy of the former, one must decrease the accuracy of the latter and vice versa. I was wondering if these same constraints exist for MACD since ideally I want timely (to know instantaneously) trend existence accuracy (100% accuracy of identifying the existence of a current trend). Clearly MACD does not allow us to have both since then it would be a PERFECT indicator. So our degree of accuracy and the timeliness of when we are informed can be no better than the behavior of our equity vehicles. Thus the answer appears to be that if the desire is to find out sooner about a trend being in place, we have to accept having more false signals and vice versa; hence what appears to be some sort of price uncertainty principle... I am far from any expert in any sense of the word so I want to stress that I feel my thoughts should be taken with a grain of salt. But the initial realization of the race game analagy/strategy is indeed supreme, so it is the absolute best. There is no uncertainty in that fact or concept!!! LOL... Dry Humor...

Quote from svrz:

ROC of price or ROC of MA of Price?

LOL. Your question is my question too. To be clearer, I know what MA does and I know I want the first derivative of Price. I am just not sure if ROC (the indicator or any other combination of indicator) addresses what is needed; smoothed prices (for now) and the first order derivative of price (for now).

REGARDS,
G33M4K the Newb

 

[svrz]

Quote from g33m4k:

I had read this as using a ROC(MACD(5,13), 6) instead of ROC(MACD(5,13,6)).

Actually what you had initally was correct. ROC(MACD(5,13), 6) is what I wrote initially.

I want to clear any confusion I had started in that the terms I am using are the mathematical terms. I am completely brand new to this world of investments so things like indicators and oscillators are things which I do not understand yet. For example, why is Stochastics called stochastic? Stochastic in mathematical terms indicates that a completely random component is in every single value of the function. Is stochastic a misnomer???

Yes, it is. The late George Lane is credited with inventing this indicator and volumes have been written on why, how, where and what of this misnomer.

So when I state Rate of Change, I am referring to the calculus term change in y change in x (y=Price,x=time), not the indicator term. My apologies svrz .

No apologies are needed, what so ever. ROC, in TA world, is defined as:

Price(t0)/Price(t0 - t1) * 100

Where t0 = this period
t1 = some period

My apologies again. The uncertainty principle is a physics constraint discovered and quantified by Heisenberg. It states that there is a physical limit to how accurately one can measure the momentum AND position of a particle.

I thought that you may have been referring to Heisenberg but I was not sure how it related to these indicators. Thanks for the explanation.

To increase the accuracy of the former, one must decrease the accuracy of the latter and vice versa. I was wondering if these same constraints exist for MACD since ideally I want timely (to know instantaneously) trend existence accuracy (100% accuracy of identifying the existence of a current trend). Clearly MACD does not allow us to have both since then it would be a PERFECT indicator.

Take a look at this site:
http://www.jurikres.com/catalog/ms_ama.htm

This vendor gets high marks as far as creating indicators that have near zero llag. Take a look around:
http://www.jurikres.com/index.htm

It is interesting.

So our degree of accuracy and the timeliness of when we are informed can be no better than the behavior of our equity vehicles. Thus the answer appears to be that if the desire is to find out sooner about a trend being in place, we have to accept having more false signals and vice versa; hence what appears to be some sort of price uncertainty principle... [\B][\QUOTE]

Perhaps this is E=mc^2 equivalent of trading.

LOL. Your question is my question too. To be clearer, I know what MA does and I know I want the first derivative of Price. I am just not sure if ROC (the indicator or any other combination of indicator) addresses what is needed; smoothed prices (for now) and the first order derivative of price (for now).

I will play with this concept a bit more in WL. BTW, you can download a 30 day trial version of WL. I think you find it very useful.

Take care

 

[g33m4k]

Quote from Lefty62151:

Hello:
I looked through your thread and tried to read through Mr. Hershey's posts. First I want to offer you my congratulations. I think I am of above average intelligence. But the majority of Mr. Hershey's comments are, as far as I can see, unintelligible. Perhaps I am not as intelligent as I thought

Let me state that intelligence is irrelevant. I graduated from an ivy league school and managed to memorize EVERYITHING and learn absolutely NOTHING despite all the effort and I assure you it was a tremendous 24/7 effort for 4 years. I had used a severely flawed learning approach, memorize since I never had time, instead of taking the time to figure out (which is what I did thru high school). I was far from bright. My acceptance was based on an acute learning ability, that's all. Anyone can learn, it just boils down to the effort we make to learn. Learning will enable everything to look simple. This is why I post so many conceptual questions rather than blindly taking settings. EVERYTHING looks simple once you understand how ALL the components work. What Jack has done may seam cryptic and I've read countless postings stating this but I must say, it is far more difficult from his vantage point to phrase it in the simplest possible terms; hence his lengthy postings. Looking at the entire picture without understanding fundamentals will look nothing like KISS and will most certainly look overwhelming. It certainly did for me 3+ weeks ago when nothing made any sense. I am certain that you are alot more capable than I am. My only crutch/benefit is a lack of beliefs in what ought to be happening.

Quote from Lefty62151:

As to the system that you have put together, I want to offer a couple of thoughts. First on the subject of "dry up volume". Looking at the variation of DRV, it is clear that the concept has merit, however Mr. Hershey did not, or does not have a way to reliably determine that level. It is likely that DRV varies with each stock that you follow, and with time. If for instance, the stock becomes well known, that process will affect the number of market participants who will want to transact in that issue. If it is a listed stock, the market maker will at some point have to adapt to changes in volume as well. I am just putting forth an example. There are several other issues that probably affect DRV, making it difficult to determine accurately.

I will think about your comments and respond accordingly. My brother who is a stock broker has informed about the behavior of the Market Makers at his company. I don't entirely understand the Market Maker participant so I will try to understand and respond... I have yet to decide if a Market Maker is good/bad/irrelevant.

G33M4K the Newb

 

[Lefty62151]

Hello:
I don't really think much about the market maker as good/bad, but I do know that they have a specific motivation for handling order flow. The mandate is to make an "orderly" market. In addition in certain circumstances (when they see specific types of orders), they are allowed to "participate" by buying or selling in front of a retail or institutional order, and/or by selling out of their own inventory to fill orders. As you may anticipate, they do so when the are permitted so that they can obtain profit and manage risk This over simplification does not give a comprehensive picture of what they do, but is meant to point out that the way they handle order flow can and does change as volume changes. In addition, a Market Maker often handles several issues and his/her attention may be diverted from a stock that has less volume to one that is really popping. The Clerks have the discretion to handle certain kinds of orders without the Market Maker and this can have an effect on how orders are filled as well as what type of price action you will see from time to time. Actually the subject is complex. An in-detail account of market maker activities is available from ET poster "DeeMan". You can get to that thread by searching for his name. Best Regards, Lefty

 

[g33m4k]

Quote from Lefty62151:

Hello:
I don't really think much about the market maker as good/bad...

Thanks Lefty,

GREAT EXPLANATION . Thanks for your comments. I've seen a couple of people mention that they just track the market makers on their Level II screens and profit from the huge slippage that Market Maker's often have to endure when maneuvering. I just assumed that Market Maker's can be bad because my brother said that it is a powerful and hugely profitable strategy that his company won't admit that they prefer to be in if their capital permits. I will read DeeMan's post to gain better understanding.

Thanks Again,
G33M4K

 

[gallas2]

Quote from gallas2:

Long CETV. Lesson here is that what looks like a perfect set-up may take several days to trigger. Seen this hundreds of times.

Take half profits on CETV now at 34.

Move stop to 33 on rest.

 

[g33m4k]

Moving right along, here is version 19. Not trying to step on any toes. Just including what svrz has already coded up in WL into our ever expanding workbook. Just to address any considerations, all the data works into the "Easy Scan" portion of the QA-ROI.doc. Several posts across a few threads specifically explain what's happening here. This may require some light reading for this to settle in. This should allow for greater range in tracking the progression of equities across it's cycle. If I am not mistaken, staging is used to isolate which cycle quadrant an equity is currently in as it rotates into and out of play for us. Can anyone elaborate on this?

One item does seam to be in error and that is the "Stage 1 or Stage 3" filter. It is not possible for the LO 5 days ago to be 10% higer than the HI 30 days AND also for the LO 30 days ago to be 10% higher than the HI 5 days ago... Is the second inequality sign backwards?

G33M4K the Newb