Spydertrader's Jack Hershey Equities Journal

[Spydertrader]

2005-03-18, Friday - Lists

I used RS and EPS Settings of 90 for the following lists

Stocktables.com
Sevens - Ones - Zeros
MT - MDRX - TIE
WLK - EZPW - MTEX
NSS - TOPT - WWCA
ACI - WLL - CTSH
LCBM - JOYG - MEE
CENX - CMC - ELOS
WCC - POG - USNA
LCAV - MHR - VPI
MEE - ISRG - CCJ
TRGL - MIPS

Wealth-Lab Chartscript/Manual
Hotlist

TRGL
ELOS
EZPW
MIPS
LCBM
TOPT

Wealth-Lab Data/Yahoo Data
Watch List

CUTR - DU Cycle
TASR - DU Cycle - DU5
FRD - DU Cycle - DU5
SYNA - DU Cycle
COGT - DU Cycle
MFLX - DU Cycle - DU5
UBET - DU Cycle
BCSI - DU Cycle
MIPS - DU Cycle
TOPT - DU Cycle
SINA - DU Cycle - DU5 - DU10 - DU20
SNDA - DU Cycle - DU5 - DU10
SGTL - DU Cycle
ULBI - DU Cycle
PMTI - DU Cycle
ISSC - DU Cycle - DU5 - DU10

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

COGT - 2
SINA - 0
SYNA - 0

Eyeball
Gallas2 "Keep an Eye on These" Stocks

ISSC (Attached)

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

CUTR
SYNA
MIPS
SINA
SNDA
SGTL
ISSC

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

MFLX - 1
PMTI - 1
SINA - 0
SNDA - 0
TASR - 2

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

FORD 0
PMTI 0
ELOS 1
MFLX 1
MIPS 1
TOPT 1
KEYW 2
TRGL 5

The following Stocks have been ADDED to the Final Universe List as of 2005-03-17: LCBM.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=707825>

 

[Spydertrader]

2005-03-18, Friday - ELOS Update

News on ELOS:

http://tinyurl.com/5rbqm

- Spydertrader

 

[Spydertrader]

2005-03-18, Friday - Update

Our system triggered a possible buy signal today when actual volume for MFLX exceeded calculated Dry Up Volume just after 11:00 AM EST this morning. Unfortunately, MFLX did not show price improvement at the time of signal generation. As a result, I took no action with regards to MFLX.

ELOS continues to improve in price reaching a morning high of $32.18 USD. Accordingly, we have improved our stop in parallel with price. As a result, our stop for ELOS would normally stand at $30.75 USD. However, around the 11:00 AM timeframe, price for ELOS blew right past our target price of $31.51 USD, and currently sits at $32.00 USD. Because today marks the fourth day of our holding cycle for ELOS, I have improved the stop even further to our target price of $31.51 USD. Today's Volume for ELOS has already exceeded Peak Volume numbers indicating we should consider exiting the trade.

I plan to monitor volume and price for ELOS during the afternoon session to determine the best exit strategy. Should volume and price continue to degrade over this afternoon, I plan to exit before price reaches our current target / stop price of $31.51 USD.
IF volume and price continues to improve or remain steady, I plan to exit before EOD.

I hope you find the above information useful.

- Spydertrader

 

[Trend Fader]

Quote from Spydertrader:

2005-03-18, Friday - Update

Our system triggered a possible buy signal today when actual volume for MFLX exceeded calculated Dry Up Volume just after 11:00 AM EST this morning. Unfortunately, MFLX did not show price improvement at the time of signal generation. As a result, I took no action with regards to MFLX.

ELOS continues to improve in price reaching a morning high of $32.18 USD. Accordingly, we have improved our stop in parallel with price. As a result, our stop for ELOS would normally stand at $30.75 USD. However, around the 11:00 AM timeframe, price for ELOS blew right past our target price of $31.51 USD, and currently sits at $32.00 USD. Because today marks the fourth day of our holding cycle for ELOS, I have improved the stop even further to our target price of $31.51 USD. Today's Volume for ELOS has already exceeded Peak Volume numbers indicating we should consider exiting the trade.

I plan to monitor volume and price for ELOS during the afternoon session to determine the best exit strategy. Should volume and price continue to degrade over this afternoon, I plan to exit before price reaches our current target / stop price of $31.51 USD.
IF volume and price continues to improve or remain steady, I plan to exit before EOD.

I hope you find the above information useful.

- Spydertrader

I've been following your journal and I think you do a good job. What I dont understand is that how monitoring volume on one day has any effect on how the stock is going to do the next. I think what happens is that you end up micro managing each trade.

If a stock were to break out on huge volume off some type of base or downtrend line then I would be willing to take the trade as a swing trader. However, micro managing todays volume has no relevance as to where prices will be tomorrow. The heavy volume breakout might signal a trend change or a strong directional up bias of the short term.... but i would not put weight as to what might happen the very next day. You are fooling yourself if you think u can micro analyze the volume patterns of stocks on a day by day basis.

my 2 cents

--MIKE

 

[Spydertrader]

Quote from Trend Fader:

I've been following your journal and I think you do a good job.

Thank-you, but much of the credit needs to go toward the many individuals who have contributed their time, energy and effort toward the success of this Journal. Without the contribution and input supplied freely by those following the Journal's progress, we would not have achieved our current level of success.

Quote from Trend Fader:

What I don't understand is that how monitoring volume on one day has any effect on how the stock is going to do the next. I think what happens is that you end up micro managing each trade.

Using Jack's Jokari Window (see previous Journal Post), we know that if price continues to increase, but volume continues to decrease, we can expect a change in trend. We also know, that increased volume and increased price foretells a trend continuation. Given the what we know about Volume, Price, and the jokari Window, I felt it only made sense to determine if we could anticipate a trend continuation or a trend reversal after holding ELOS for 4 days (our normal maximum hold time for a stock). Determining trend progression would allow me to either A. Take profits at a level beyond my target price, or B) Anticipate holding to EOD in order to allow this particular winner to run a little.

The entire foundation for The Jack Hershey Equities System stems from two important criteria. First, the driving force behind the system itself remains the Compound Interest Formula. By trading stocks with the highest "money velocity," we seek to make money at the fastest possible rate. Second, The relationship between (P)rice, (V)olume & (A)ccumulation / (D)istribution (PVAD) indicates when to buy and when to sell a particular security. It is the very nature of the PVAD relationship which tells us that both volume and price are intertwined. As a result, we know that monitoring volume in and of itself does not indicate where price might go. Rather looking for the occurrence of a specific set of events permits us to anticipate the progression of price. This series of events includes (but is not limited to) Dry Up Volume, First Rising Volume, and Peak Volume. Actual Volume for ELOS had already exceeded Peak Volume Levels prior to my post above. Peak Volume levels often indicate a point at which one should consider selling.

Quote from Trend Fader:

If a stock were to break out on huge volume off some type of base or downtrend line then I would be willing to take the trade as a swing trader.

Then, your method of determining how and when to trade differs from the method I use. I do not require huge volume in order to take a trade. I have a clearly defined set of rules, which when followed, have provided me a consistent method of obtaining profits from the market. Because our methods differ does not mean either method is wrong.

Quote from Trend Fader:

However, micro managing todays volume has no relevance as to where prices will be tomorrow.

Simply because you do not understand how I use volume and price to determine trend does not automatically transform your opinion (that I micromanage volume) into a fact. I observe volume levels to anticipate if I can expect a trend continuation or a trend reversal. I do this specifically when a stock I hold exceeds Peak Volume Levels on what is the normal time stop for the trade.

Quote from Trend Fader:

The heavy volume breakout might signal a trend change or a strong directional up bias of the short term.... but i would not put weight as to what might happen the very next day.

I apologize if I have confused you with my comments, however, you continue to make invalid assumptions based on facts that do not exist. It isn't high volume in and of itself that I monitor. Rather, the specific series of events with volume that has occurred. $ days ago the cycle began with Elos when actual volume exceeded calculated 50% pro-rata volume. Both price and volume continued to rise and volume reached FRV levels by the End of The First Day. Two days later, actual volume for ELOS exceeded Peak Volume Levels - a condition which often foretells a trend reversal. Is it within the realm of possibility that we could see even higher volume levels on Monday for ELOS increasing the price even higher? Sure it is, but we have already exceeded our target profit levels, and I see no reason to be greedy.

Quote from Trend Fader:

You are fooling yourself if you think u can micro analyze the volume patterns of stocks on a day by day basis.

I don't think that. You think I that I micromanage the volume. First, you said, "[You] think what happens is that end up micromanaging each trade." Later, you determined I was in fact micromanaging the volume when you said, "Micromanaging today's volume has no relevance as to where prices will be tomorrow." Finally, you attempt to tell me that I actually 'think' I am doing what you think I am doing with the quoted sentence directly above. Clearly, you do not intend to presume to know what another individual thinks.

If your confusion results from a miscommunication on my part, I apologize in advance for not properly articulating my point. However, if your confusion results from not understanding the methods correctly, I suggest reviewing the background material on Mr. Hershey, his methods, and the methods we trade to avoid any future misinterpretations.

I hope you found the above information helpful.

- Spydertrader

 

[Trend Fader]

Quote from Spydertrader:

Thank-you, but much of the credit needs to go toward the many individuals who have contributed their time, energy and effort toward the success of this Journal. Without the contribution and input supplied freely by those following the Journal's progress, we would not have achieved our current level of success.



Using Jack's Jokari Window (see previous Journal Post), we know that if price continues to increase, but volume continues to decrease, we can expect a change in trend. We also know, that increased volume and increased price foretells a trend continuation. Given the what we know about Volume, Price, and the jokari Window, I felt it only made sense to determine if we could anticipate a trend continuation or a trend reversal after holding ELOS for 4 days (our normal maximum hold time for a stock). Determining trend progression would allow me to either A. Take profits at a level beyond my target price, or B) Anticipate holding to EOD in order to allow this particular winner to run a little.

The entire foundation for The Jack Hershey Equities System stems from two important criteria. First, the driving force behind the system itself remains the Compound Interest Formula. By trading stocks with the highest "money velocity," we seek to make money at the fastest possible rate. Second, The relationship between (P)rice, (V)olume & (A)ccumulation / (D)istribution (PVAD) indicates when to buy and when to sell a particular security. It is the very nature of the PVAD relationship which tells us that both volume and price are intertwined. As a result, we know that monitoring volume in and of itself does not indicate where price might go. Rather looking for the occurrence of a specific set of events permits us to anticipate the progression of price. This series of events includes (but is not limited to) Dry Up Volume, First Rising Volume, and Peak Volume. Actual Volume for ELOS had already exceeded Peak Volume Levels prior to my post above. Peak Volume levels often indicate a point at which one should consider selling.



Then, your method of determining how and when to trade differs from the method I use. I do not require huge volume in order to take a trade. I have a clearly defined set of rules, which when followed, have provided me a consistent method of obtaining profits from the market. Because our methods differ does not mean either method is wrong.



Simply because you do not understand how I use volume and price to determine trend does not automatically transform your opinion (that I micromanage volume) into a fact. I observe volume levels to anticipate if I can expect a trend continuation or a trend reversal. I do this specifically when a stock I hold exceeds Peak Volume Levels on what is the normal time stop for the trade.



I apologize if I have confused you with my comments, however, you continue to make invalid assumptions based on facts that do not exist. It isn't high volume in and of itself that I monitor. Rather, the specific series of events with volume that has occurred. $ days ago the cycle began with Elos when actual volume exceeded calculated 50% pro-rata volume. Both price and volume continued to rise and volume reached FRV levels by the End of The First Day. Two days later, actual volume for ELOS exceeded Peak Volume Levels - a condition which often foretells a trend reversal. Is it within the realm of possibility that we could see even higher volume levels on Monday for ELOS increasing the price even higher? Sure it is, but we have already exceeded our target profit levels, and I see no reason to be greedy.



I don't think that. You think I that I micromanage the volume. First, you said, "[You] think what happens is that end up micromanaging each trade." Later, you determined I was in fact micromanaging the volume when you said, "Micromanaging today's volume has no relevance as to where prices will be tomorrow." Finally, you attempt to tell me that I actually 'think' I am doing what you think I am doing with the quoted sentence directly above. Clearly, you do not intend to presume to know what another individual thinks.

If your confusion results from a miscommunication on my part, I apologize in advance for not properly articulating my point. However, if your confusion results from not understanding the methods correctly, I suggest reviewing the background material on Mr. Hershey, his methods, and the methods we trade to avoid any future misinterpretations.

I hope you found the above information helpful.

- Spydertrader

Yes I agree that I dont understant the strategy no where near as well as u do.

But i just dont think volume analysis can be used to forecast day to day price movement.

 

[Spydertrader]

2005-03-18, Friday - ELOS Update

While typing the above post, I continued to monitor both price and volume for ELOS throughout the afternoon. With the anticipated drop off in volume, we did not see a large drop off in price. However, late in the day we did see large selling pressure. As a result, I placed a sell order for ELOS liquidating all shares.

03/18/05 15:58:25 32.26 32.26 32.34 800

Our four day trade of ELOS provided us with an increase of $3.61 per share or $2888 gross profit on 800 shares.

Enjoy the weekend.

- Spydertrader

 

[Ross]

Quote from Trend Fader:

Yes I agree that I dont understant the strategy no where near as well as u do.

But i just dont think volume analysis can be used to forecast day to day price movement.

Trend Fader,

I propose you do some more reading because like many others before you (including myself), you will find as we all have that this method/system/process is truly unique. The method is spelled out in its entirety time and time again on various boards. Iterations may differ slightly but to learn the scoring method and what each score depicts would bring a smile to the most hardened stock traders face.
We know the pyramids have been built, we know because they are there (Todd’s and others P&L) however the tools and methods escape most of us (Jacks methods) this does not mean though that they never were built nor does it mean they are impossible to build. There is nothing worng with continuing to disbelieve however you have evidence right in front of you that shows that it can be done. Question then becomes, “Do ya want to know how?”

Ross

 

[Spydertrader]

Quote from Trend Fader:

But i just don't think volume analysis can be used to forecast day to day price movement.

Think of it in a similar fashion to watching your local news. The local meteorologist provides a weather forecast each evening providing temperature forecasts, chance of precipitation, wind direction and relative humidity. Occasionally, the meteorologist gets it all wrong. The blizzard predicted the night before misses the city because the weather front moved a little to the north or south. As a result, 12 inches of predicted snow turns into a light 'dusting' of snow flurries.

The same thing happens with using the (P)rice, (V)olume, (A)ccumulation / (D)istribution relationship (PVAD) to anticipate price movement. Occasionally, the specific series of events occurs without continued price breakout. We term this situation: False (or Failed) Breakout (FBO).

Now, the local news station doesn't terminate the employment of the local meteorologist simply because he occasionally incorrectly forecasted the next day's weather. Why? Because The meteorologist studies computer models and historical weather patterns that normally provide positive predictive value. The News Station doesn't base their decisions on the few incorrect forecasts. We seek a Universe of stocks that cycle five times in six months. Within each cycle, Price, Volume and Accumulation / Distribution play a role of varying importance. Prior to, and directly before, the end of each cycle, certain volume and price patterns exist. Do they exist in the same manner and fashion with each stock and in each cycle? No, of course they do not. However, they do exist with enough frequency and regularity that they have become exploitable.

I encourage you to maintain the healthy skepticism toward any idea contrary to your own beliefs and experience. However, I also encourage you to investigate the methods used by those following this journal. At worst, you might find an idea or technique that augments your already successful trading style. At best, you might find you have been given a copy of "Tomorrow's Newspaper, Today."

- Spydertrader

 

[Trend Fader]

Quote from Spydertrader:

Think of it in a similar fashion to watching your local news. The local meteorologist provides a weather forecast each evening providing temperature forecasts, chance of precipitation, wind direction and relative humidity. Occasionally, the meteorologist gets it all wrong. The blizzard predicted the night before misses the city because the weather front moved a little to the north or south. As a result, 12 inches of predicted snow turns into a light 'dusting' of snow flurries.

The same thing happens with using the (P)rice, (V)olume, (A)ccumulation / (D)istribution relationship (PVAD) to anticipate price movement. Occasionally, the specific series of events occurs without continued price breakout. We term this situation: False (or Failed) Breakout (FBO).

Now, the local news station doesn't terminate the employment of the local meteorologist simply because he occasionally incorrectly forecasted the next day's weather. Why? Because The meteorologist studies computer models and historical weather patterns that normally provide positive predictive value. The News Station doesn't base their decisions on the few incorrect forecasts. We seek a Universe of stocks that cycle five times in six months. Within each cycle, Price, Volume and Accumulation / Distribution play a role of varying importance. Prior to, and directly before, the end of each cycle, certain volume and price patterns exist. Do they exist in the same manner and fashion with each stock and in each cycle? No, of course they do not. However, they do exist with enough frequency and regularity that they have become exploitable.

I encourage you to maintain the healthy skepticism toward any idea contrary to your own beliefs and experience. However, I also encourage you to investigate the methods used by those following this journal. At worst, you might find an idea or technique that augments your already successful trading style. At best, you might find you have been given a copy of "Tomorrow's Newspaper, Today."

- Spydertrader

WHat I would really like to see is some hard statistical proof showing how volume can be used to forecast day to day price swings. With the advent of modern computing power almost everything in trading can be backtested and proven..

I mean we dont need the whole Hershey strategy backtested because it probably impossible to backtest accurately.. and if someone has done it-- the results would be welcome.

Basically, if anyone can come up with some type of startegy testing that can show how your volume analysis does provide a statistical edge.. i would be more than happy to look it over.