Spydertrader's Jack Hershey Equities Journal

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Quote from johnc99:


Just for clarification, I am qualifying a stock based on my highest calculated DU volume for that day, and then looking for trades based on volume exceeding the lowest calculated DU volume the following day. Does this sound correct?
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Unfortunately, no. In order for a stock to make the hot list, it must have had dry up volume the day before. I currently use a variety of Dry Up Formulae in order to determine the "best" method for Dry Up Volume calculation. Unfortunately, no single method has stood out above the rest. TASR only has dry up volume on the previous day using the DU Cycle Formula. All other formulae do not place TASR into Dry Up. Therefore, current volume must exceed that level of volume calculated by that particular formula placing the stock in Dry up the day before (in our case Du Cycle - for TASR). Each method of dry up volume acts independently. TASR's actual volume for yesterday exceeded the calculated DRY Up Volume for DU5 - DU10 & Du20. Therefore TASR was not in Dry Up according to these formulae.

Often a stock will find itself in Dry Up based on all methods used (IDSA & ESMC today). In that case, you can use the lowest level of volume for entry because that level is also the level of dry up volume. With TASR today, the lower levels of volume were not.

As a result, that is why TASR did not trigger any signals for me today - volume did not exceed DU Volume (DU Cycle) nor was there enough pro-rata volume at 10:00, 10:30 or 11:00 AM (Again, based on DU Cycle). At about 1:00 PM this afternoon, TASR actual volume finally exceeded the only volume which had it in dry up the day before (DU Cycle).

Now, having said all that, we currently have a revised set of entry criteria that enters earlier based on previous day volume (PDV) on stocks that are currently in dry up AND have a G33M4K Master List Score of Zero. While additional testing is required before drawing conclusions, early results indicate we may have something of value. As a result, I encourage you to track your results using your entry methods over time and report your findings. You may uncover when a stock has a certain 'score' it is best to alter your entry criteria as you did today.

I hope that helped.

- Spydertrader

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=645329>
 

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Once again, I altered the settings at the stocktables.com web site in order to obtain the correct number of stocks: RS: 80 - EPS: 90

Sevens - Ones - Zeros
EEFT - SEM - CMTL
ACMR - MRVL - AMHC
HOLX - LNCR - CSE
FARO - DRIV - CTSH
NGPS - CYTC - UPL
DHI - CKFR - DVA
FFIV - PACT - AMX
ANT - BLL - NIHD
AFFX - EAGL
RIO - URBN

Hotlist

PACT
NGPS
FFIV

Watch List

IDSA - DU Cycle
ESMC - DU Cycle - DU5 - DU10 - DU20
BCSI - DU Cycle - DU5 - DU10
CALM - DU Cycle - DU5 - DU10 - DU20
TRMM - DU Cycle
HRT - DU Cycle - DU5 - DU10 - DU20
SWIR - DU Cycle - DU5 - DU10 - DU20
ALDN - DU Cycle
EVCI - DU Cycle - DU5 - DU10 - DU20
NAVR - DU Cycle
ENWV - DU Cycle - DU5 - DU10 - DU20
HANS - DU Cycle - DU5 - DU10
BAMM - DU Cycle
SINA - DU Cycle - DU5 - DU10
DECK - DU Cycle
ASKJ - DU Cycle - DU5
GMAI - DU Cycle - DU5
NVEC - DU Cycle - DU5
LSCP - DU Cycle
ANIK - DU Cycle

SRVZ Wealth Lab Equations - Dry Up

BAMM
MKTW
VSEC

G33M4K Score for the above Stocks

BAMM - 0
MKTW - 1
VSEC - 2

Gallas2 "Keep an Eye on These" Stocks

PETD (Attached)

Dry Up Stocks with G33M4K Master List Score of Zero

BAMM
DECK
HANS
NAVR

(VSEC, IDSA, HRT, LWAY, NVEC & NGPS have float outside normal parameters)

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Quote from Spydertrader:

Unfortunately, LWAY has a float outside our system criteria. As a result, we cannot take the trade.
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Don't use an absolute float value. You should look at the ratio of average daily volume to the stock float and then sort by high ratios. Then you can participate in the liquid, as well as volatile, issues and eliminate the illiquid issues where the trade slippage is a higher percentage.
 
Our system signaled two possible trades this morning: SINA & NVEC. Unfortunately, both stocks failed to meet the criteria necessary for trading. With SINA, we fail to see price improvement over the previous trading day. Although off the daily low, the current price for SINA trades down over two dollars at time of this post. NVEC has an average trading volume under our normal parameters, but 'close enough' to remain under consideration should it meet all additional criteria. Unfortunately, NVEC gapped up nearly 10% at this morning's open. Experience tells us that "large gap open" stocks - especially those of the 10% magnitude - more often than not fail to achieve our target gains, and frequently, result in losses. Therefore, we take no action in regards to NVEC.

When observing our "Dry Up Stocks with a Master List Score of Zero," we see that volume remains light and well below previous day volume.

Because our Watch List stocks failed to meet our criteria for taking on a trade, we take no action today.

- Spydertrader
 
Quote from Spydertrader:

Unfortunately, both stocks failed to meet the criteria necessary for trading. With SINA, we fail to see price improvement over the previous trading day.
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Spydertrader, thanks for your help with TASR last week, you cleared up some confusion there I was having.

I know you are not officially recording short trades for this journal, but would SINA have been a good short candidate this morning? Looked like MACD was negative and stochs were extrememly low when 25% prorata volume was exceed shortly after open. Also, depending how you draw the trendlines, it could have potentially penetrated an upward channel to the downside, although it may bounce off the 50MA. Hmm...

Thanks for your insight -JohnC99
 

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Quote from johnc99:

Would SINA have been a good short candidate this morning?
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To answer your question without appearing to use "hindsight" analysis requires we look at the fundamentals of the trade set up. You correctly observed that both MACD (-.2367) and The Stochastic Indicator (3.5576) indicated a strong downward trend at the time actual volume exceeded 25% pro-rata volume. According to my charts, price for SINA, when a 'short trade' signal appeared, was $34.24 (down nearly $1.50 from previous day). If we choose to look at shorting Hershey Stocks as needing the opposite set of criteria in place than taking a long position, then SINA does fit as a possible short trade today. Prior to entering long, determining an exit point becomes or next objective. Since the stock had already moved nearly 5% prior to the generation of our signal, we determine a MACD crossover exit might provide superior results, or you could hold until the end of the day to determine if volume levels reached FRV status. However, the best exit strategy for this trade would have been to target the 50-day moving average trendline as a point of resistance, and exited when price hit that level.

It is important to note however, that the above strategy worked using 'pro-rata volume.' Waiting until actual Dry Up Volume levels had been reached would have placed us into the trade much too late. Also, a review of the posts regarding shorting Hershey Stocks indicates most short trades occur intraday, significantly less than our normal 4 day hold cycle.

Again, the vast majority of posts written by Jack Hershey indicate The Hershey Equities Method trades with a 'long only' bias. However, your analysis of the 'short trade' set up with SINA followed the criteria perfectly.

- Spydertrader
 
Once again, I altered the settings at the stocktables.com web site in order to obtain the correct number of stocks: RS: 80 - EPS: 90

Sevens - Ones - Zeros
NGPS - SEM - AFFX
LB - CKFR - ANT
HOLX - TASR - DVA
EEFT - BLL - URBN
FARO - DRIV - CSE
AMHC - MRVL - BKS
MDRX - NIHD - CYTC
---- - HTCH
---- - PACT
---- - AMX

Hotlist

PACT
NGPS
TASR

Watch List

IDSA - DU Cycle
ESMC - DU Cycle - Du5 - Du10 - Du20
BCSI - DU Cycle - Du5
TASR - DU Cycle
CALM - DU Cycle - Du5 - Du10
TRMM - DU Cycle
SWIR - DU Cycle - Du5 - Du10
ALDN - DU Cycle
EVCI - DU Cycle - Du5
NAVR - DU Cycle
ENWV - DU Cycle
GDP - DU Cycle
HANS - DU Cycle
BAMM - DU Cycle
PETD - DU Cycle
SMTS - DU Cycle - Du5
ASKJ - DU Cycle
LSCP - DU Cycle
DPTR - DU Cycle
ANIK - DU Cycle - Du5

SRVZ Wealth Lab Equations - Dry Up

BAMM
ENWV
TRMM
VSEC

G33M4K Score for the above Stocks

BAMM - 3
ENWV - 7
TRMM - 6
VSEC - 2

Gallas2 "Keep an Eye on These" Stocks

LSCP (Attached)

Dry Up Stocks with G33M4K Master List Score of Zero

TASR

(VSEC, IDSA, HRT, LWAY, NVEC & NGPS have float outside normal parameters)

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=647492>
 

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The system generated one signal this morning as EVCI experienced an extremely large volume surge - even before the open. At nearly ten times the average daily volume, EVCI gapped up in price by 9.7% at the open. While both MACD and The Stochastic Indicator fell within desired parameters early during trading, gapping up by such a large amount prevented me from entering into a trade. Normally, the relatively lite average volume for EVCI would have eliminated it from consideration. However, with such a huge increase in volume today, I doubt the normal slippage penalty for purchasing thinly traded stocks would have applied. TASR continues to trade on lighter than normal volume, and continues to see a price reduction over the previous day. As a result, it does not appear as if we will take any action today in regards to entering into a long position. I plan to monitor the watch list for the remainder of the afternoon in case one of our equities makes a run at FRV status.

- Spydertrader
 
Once again, I altered the settings at the stocktables.com web site in order to obtain the correct number of stocks: RS: 80 - EPS: 90

Sevens - Ones - Zeros
XPRSA PACT - DHI
DVA - DRIV - CKFR
HOLX - SEM - CTSH
SRDX - TASR - CYTC
EEFT - FFIV - MDRX
DHI - LNCR - ET
URBN - MRVL - NIHD
---- - KSWS - AFFX
---- - AMHC
---- - YHOO

Hotlist

PACT
TASR
FFIV

Watch List

PACT - Du Cycle - DU5
IDSA - Du Cycle - DU5 - DU10
ESMC - Du Cycle - DU5
BCSI - Du Cycle - DU5
TASR - Du Cycle
CALM - Du Cycle - DU5 - DU10 - DU20
SWIR - Du Cycle - DU5
FFIV - Du Cycle - DU5
NAVR - Du Cycle
ENWV - Du Cycle - DU5 - DU10 - DU20
GDP - Du Cycle
HANS - Du Cycle - DU5
SINA - Du Cycle - DU5
SMTS - Du Cycle - DU5 - DU10
ASKJ - Du Cycle - DU5
VSEC - Du Cycle
NTES - Du Cycle - DU5 - DU10
GMAI - Du Cycle - DU5
LSCP - Du Cycle
ANIK - Du Cycle

SRVZ Wealth Lab Equations - Dry Up

ENWV
GMAI
HANS

G33M4K Score for the above Stocks

ENWV - 4
GMAI - 0
HANS - 0

Gallas2 "Keep an Eye on These" Stocks

LIFC (Attached)

Dry Up Stocks with G33M4K Master List Score of Zero

ASKJ
FFIV
GMAI
HANS
LSCP
SWIR
TASR

(VSEC, IDSA, HRT, LWAY, NVEC & NGPS have float outside normal parameters)

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=648405>
 

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The system generated another possible trade this morning as ENWV actual volume exceeded calculated Dry Up Volume just after the open. However, ENWV possesses several flaws preventing us from trading this signal. First, average daily volume on ENWV remains extremely low. Second, while MACD numbers (+.0452) looked good, The Stochastic Indicator (42.9877) failed to reach our desired level. As a result of our desire to avoid 'thinly traded' stocks and to only trade when certain levels of The Stochastic Indicator have been achieved, we take no action in regards to ENWV.

A review of yesterday's run on EVCI yields an interesting observation. Had we actually taken on the trade when we received our signal, we would have reached our target goal of 10% gain. Although volume on EVCI exceeded a 20 fold increase over the average volume, today's volume appears to be more in line with normal levels. Even though a trade on EVCI would have provided us with profit, we had no way of knowing such high volume levels on EVCI would have materialized by the end of the day. As a result, I still feel the risk associated with thinly traded equities outweighs the apparent gain observed while reviewing EVCI.

FFIV has made a run up in price this morning, but has done so on relatively low volume. We often see a similar behavior from HANS - where price increases on low volume, but falls on high volume.

- Spydertrader
 
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