Spydertrader's Jack Hershey Equities Journal

[Spydertrader]

2005-04-08, Friday - Update

Our system generated four signals today.

The first signal occurred at 9:40 AM when actual volume for BCSI exceeded calculated 50% pro-rata Dry Up Volume (for DU Cycle). Unfortunately, we did not see price improvement ($21.69, down $2.55) at time of signal generation. As a result, we take no action with respect to BCSI.

Our second signal occurred at 10:21 AM when actual volume for USG exceeded calculated 50% pro-rata Dry Up Volume (for DU Cycle). We did see price improvement ($37.55, up $4.07) and a positive MACD (+.2645) at time of signal generation. However, The Stochastic Indicator failed to confirm the trend (50.4127) falling well below desired parameters. As a result, we take no action with respect to USG.

Our third signal occurred at 10:30 AM when actual volume for ELOS exceeded calculated 50% pro-rata Dry Up Volume (for DU Cycle). We did have price improvement ($33.11, up $1.51) and a positive MACD (+.0383) at time of signal generation. However, once again, The Stochastic Indicator (61.8822) failed to confirm the trend. As a result, we take no action with respect to ELOS.

Our fourth and final signal of the morning occurred at 10:59 AM when actual volume for COGT exceeded calculated 75% pro-rata Dry Up Volume (for DU10). Unfortunately, we did not see price improvement ($22.49, down .57) at time of signal generation. As a result, we take no action with respect to COGT.

Actual Volume for both BCSI & USG exceeded calculated FRV Levels by EOD, whereas actual volume for both ELOS and COGT did not.

We continue to hold our 500 shares of CUTR moving our stop upward in parallel with price. Our current stop holds at $18.82.

Enjoy the weekend.

- Spydertrader

 

[paultx]

Spydertrader,
I've been following this thread with great interest. The system intrigues me and your results are very good.

I've read a great deal here and I believe I understand the basics:
The system looks for quality stocks that have shown a tendency to cycle within the last six months.
The "rank" given a stock measures how well the stock has repeated these periodic swings.
The "score" quantifies where the stock is in it's present cycle - 0 being at the bottom and 7 being at the top.

I understand the different methods used to calculate DU.

Here's my question;
Your latest version of chartscript at Wealth Lab shows values relating to DU.
I'm not looking at it but I believe they are the high, low and average calculations.
Which of these values do you actually use to monitor whether the stock has exceded DU?
What do you mean by the term "pro-rata"?

Thank you for your time and for sharing the system.

 

[Reno]

Hello paultx,

I asked Spydertrader a similar question a few weeks ago and this was his reply

"Use of the Hershey Equities Rank V 2.0.1 still finds itself in the testing and evaluation phase. However, I envision using the Lower Band (or 50% pro-rata of the Lower Band) to trigger a possible trade, and using both Average DU and High Band for confirmations along with FRV at EOD."

Pro rata simply means if volume exceeds 50% of DU (your choice to use average DU, lower or high band values) before 10 a.m. enter on the expectation of exceeding DU by 11 a.m. assuming price action, stochastics, and macd confirm. I presume Spydertrader would exit the trade at EOD if FRV is not exceeded.

 

[paultx]

Reno,
Thanks for your reply.
I had read Spydertrader's reply to you and had came to about the same conclusions that you did.

There were a couple of things that made me wonder.
The FRV given on the chartscript is 3 x "average" DU. This implies that "average" is the DU figure being used.
Pro-rata still has me stumped.
Let's assume that the lower band is the actual volume that we want to see by 11am. If we see 1/2 of this volume, 1/2 of the way betwen the open and 11AM (10:15AM) would that be 50% pro-rata?

Spydertrader also uses other pro-rata numbers. I assume that 35% pro-rata means 35% of DU by 10AM.

Thanks again for your help.

 

[Spydertrader]

Quote from paultx:

Spydertrader also uses other pro-rata numbers.

According to The Jack Hershey Equities Method, we want to enter into a long position with stocks as they transition from a score of zero or one to a score of seven or six. In order to accomplish this goal, we want to own stocks as they hit the "First Rising Volume" stage of their respective cycle. We have learned from experience that stocks having an actual volume exceeding calculated Dry Up Volume prior to 11:30 AM normally reach FRV status by EOD. Using pro-rata volume numbers allows for an earlier entree into a particular stock. One might use pro-rata numbers in order to catch an ever increasing share of the price movement. However, with increased reward comes increased risk. The further one moves away from the FRV levels as a buying indicator the greater the risk.

I have used three different pro-rata volume levels in the past. Each pro-rata volume levels corresponds to the percentage of the calculated Dry Up Volume level for each individual equity.

75% pro-rata by 11:00 AM
50% pro-rata by 10:30 AM
25% pro-rata by 10:00 AM

Using the 25% pro-rata volume as a volume threshold yields far too many false (or failed) breakouts (FBO). Using 75% pro-rata volume doesn't capture enough of the initial price move to justify the increased risk of FBO (in my opinion). As I result, I settled on using the 50% pro-rata levels. Often, volume on a particular stock fails to exceed earlier pro-rata levels, and one may be forced into using 75% pro-rata or calculated Dry Up Volume (without pro-rata). Volume for COGT on Friday (2005-04-08) shows an example of this.

We calculate FRV as 3 times DU Volume, and we calculate Peak Volume as 2 times FRV. With the second Version of our Hershey Chartscript, we use an Average Dry Up as a basis for FRV and Peak levels. However, we have added a 'range' of Dry Up Volume possibilities (from low band to high band). This "Dry Up Volume Range" resulted from my long held belief that (with respect to Dry Up Volume) we may be trying to quantify that which remains unquantifiable." As a result, using the "High Band" as our Dry Up level, any stock with an actual volume lower than the "High Band" would be described as "In Dry Up." We then use the "Low Band" as our 'trigger' to determine if we need to observe price, MACD and Stochastics in order to make a buying decision. One could also use pro-rata volume as well based on the "Low Band" as well.

Once we have entered into a Long Position, we continue to monitor both price and volume as we look for the market to confirm our decision to buy. If you used 50% pro-rata as an entry level, you would want to see volume exceed calculated Dry Up Volume by 11:30 and FRV by EOD day. Since we have numerous methods for calculating Dry Up Volume (at last count some ten variations), it stands to reason we would arrive at ten different levels of FRV and Peak. Determining what actual volume level equates to FRV (for our particular trade) becomes simply a matter of multiplying by 3 the current level of Dry Up used. If we used a "Low Band" for Dry Up, we use three times "Low Band" for FRV.

Keep in mind additional testing and analysis of the above procedures are required before I can implement the above into an actual trading plan. In addition, testing and analysis may yield significant variations on the steps outlined.

I hope you find the information helpful.

- Spydertrader

 

[paultx]

Thank you for the explanation. I think it tied most of it together for me.

Couple more questions-
1. If a stock does not have a score of 0 or 1 on your Chartscript, do you bother to monitor volume the next mprning for a buy signal?

2. If you have bought in the morning, at EOD is it required that not only FRV must be achieved but that the stock must be above the previous days close and that stochastic and MACD requirements be met? If not the position is closed. Correct?

Thanks again for your help.
I'll try a small buy tomorrow.

 

[Spydertrader]

Quote from paultx:

Thank you for the explanation. I think it tied most of it together for me.

Glad to help out.

Quote from paultx:

If a stock does not have a score of 0 or 1 on your Chartscript, do you bother to monitor volume the next morning for a buy signal?

Ideally, the score for a particular stock indicates a position on a price curve, and a stock's price transitions smoothly from one point on the curve to the next. However, reality often contradicts our ideal. As a result, volume (and whether or not a stock finds itself "in Dry Up") maintains a higher priority than score. I monitor any stock (irrespective of score) that finds itself "in Dry Up" from the night before.

Quote from paultx:

If you have bought in the morning, at EOD is it required that not only FRV must be achieved but that the stock must be above the previous days close and that stochastic and MACD requirements be met? If not the position is closed. Correct?

Price, MACD and Stochastic requirements are met before one enters into a long position. Once I enter into a long position, I'm looking for FRV on volume almost exclusively. If actual volume fails to exceed FRV by EOD, I exit before EOD. I have found that relying on MACD and Stochastics for exit criteria often provide false signals. With regard to price maintaining a position above the previous day close, I suspect the 5% trailing stop loss would already have taken you out of the trade if the scenario you describe were to occur. However, one must always remain ready to exit for a wash should market dynamics indicate a change in environment.

Quote from paultx:

I'll try a small buy tomorrow.

May you find success in your endeavors, and I look forward to reading about your success in the future.

- Spydertrader

 

[Spydertrader]

2005-04-11, Monday - Lists

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

Stocktables.com
Sevens - Ones - Zeros
LQU - PTEN - MHR
USG - UNT - CYH
IRIS - LSS - SYXI
BEBE - MEE - QSII
MCRI - WWCA - CYCL
ELOS - MDRX - FLSH
PRGS - KFX - DHC
CEDC - CCJ - PARL
CYCL - JOYG - FORD
QSII - TOPT - VTIV

Wealth-Lab Chartscript/Manual
Hotlist

FORD
ELOS
TOPT
USG
MCRI
PARL

Wealth-Lab Data/Yahoo Data
Watch List

DCAI - DU Cycle
TASR - DU Cycle - DU5
FRD - DU Cycle - DU5 - DU10 - DU20
EXM - DU Cycle - DU5
SYNA - DU Cycle - DU5 - DU10
MFLX - DU Cycle - DU5 - DU10 - DU20
MIPS - DU Cycle - DU5 - DU10
SIGM - DU Cycle - DU5
BLTI - DU Cycle - DU5 - DU10
EZPW - DU Cycle
TOPT - DU Cycle - DU5
JUPM - DU Cycle - DU5 - DU10
FFIV - DU Cycle
GDP - DU Cycle
SPTN - DU Cycle
ULBI - DU Cycle
PMTI - DU Cycle
LCBM - DU Cycle
ISSC - DU Cycle - DU5

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

EZPW - 0
FRD - 2
SYNA - 0

Eyeball
Gallas2 "Keep an Eye on These" Stocks

MIPS (Attached)

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

DCAI
EXM
SYNA
MIPS
BLTI
EXPW
TOPT
JUPM
GDP
SPTN
ULBI
PMTI

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

BLTI - 1
EXM - 0
FFIV - 2
FRD - 2
JUPM - 0
LCBM - 1
MFLX - 2
MIPS - 0
PMTI - 0
SIGM - 2
SPTN - 0
SYNA - 0
TASR - 2
TOPT - 0

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

DCAI 0
EZPW 0
GDP 0
MIPS 0
TOPT 0
TRGL 0
XXIA 0
FORD 1
MFLX 2
PARL 3
ELOS 7

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=725216>

 

[Capablanca]

Hello, I'm new here so I hope you'll forgive any indiscretion due to my naivete. I've only read up to about page 35 of this thread so far but I find this thread intriguing enough that I have already begun going through some of the steps of the method. However, I find I am not sure how to use the Wealth-Lab Chartscript for this.

Can the Chartscript be run through the Wealth-Lab.com site or must it be used within the program itself? Is it a screen that's supposed to produce an alert list or is it a template one has to apply to every stock manually to assess each one-by-one visually to glean the info? If one doesn't have Wealth-Lab Developer is the Clearstation "bulking" method with the assessment sheet the only alternative or can makosgu's Excel spreadsheet do everything now after getting the data from stocktables.com?

I am also wondering what is the most recent version of the Master List macros produced by makosgu. I've seen up to version 0.18 so far and I'm still having downloading/Excel hanging problems whenever I try to get info for more than 5 stocks at a time---that's why I'm still unsure as to just how useful it is. Maybe it's the limitation of a dialup connection but if any of you have any ideas on what else could help alleviate the problem I'd love to hear them.

Thank you all for this interesting thread!

 

[Spydertrader]

Quote from Capablanca:

Hello, I'm new here so I hope you'll forgive any indiscretion due to my naivete.

Each of us began our journey in the same fashion as yourself - one step at a time. Feel free to continue to request any clarification you might require. You'll find many here willing to help you.

Quote from Capablanca:

Can the Chartscript be run through the Wealth-Lab.com site or must it be used within the program itself?

The Wealth-Lab Chartscripts run on both The Wealth-Lab Developer (WLD) Program and on the Wealth-Lab.com web site. Subtle differences exist between the code used for the WLD Program and the Web Site. The differences have to due with running the program from one location (web site) vs. importing indicators (WLD Program). However, the results for both uses of the code remain identical irrespective of the differences used in coding.

Quote from Capablanca:

Is it a screen that's supposed to produce an alert list or is it a template one has to apply to every stock manually to assess each one-by-one visually to glean the info?

You run each stock through the system to determine which stocks:

1. Meet the minimal criteria required (Have a rank)
2. Find themselves already "In Dry Up" (Green background)
3. Calculate Dry Up, FRV and Peak Volume levels
4. Calculate Score

Basically, The Hershey Chartscripts save time over manually completing an "assessment sheet" for each stock.

Quote from Capablanca:

If one doesn't have Wealth-Lab Developer is the Clearstation "bulking" method with the assessment sheet the only alternative or can makosgu's Excel spreadsheet do everything now after getting the data from stocktables.com?

One can use the Wealth-Lab.com web site to create a daily Hotlist and Monitor the Final Universe List. Many use the Chartscripts located their each day. I believe some of the later versions of G33M4K's Excel sheets due the culling and list (sevens - ones - zeros) creation for you.

Quote from Capablanca:

I am also wondering what is the most recent version of the Master List macros produced by makosgu. I've seen up to version 0.18 so far and I'm still having downloading/Excel hanging problems whenever I try to get info for more than 5 stocks at a time---that's why I'm still unsure as to just how useful it is. Maybe it's the limitation of a dialup connection but if any of you have any ideas on what else could help alleviate the problem I'd love to hear them.

I have used version .18 to only calculate 'score' for each stock, and have not used any of the other versions of his excel sheets. I believe any problems with 'buggy' code have been fixed in later versions of the G33M4K Excel Sheets, and you'll find these improved sheets later in the journal.

I hope you find the above information helpful.

- Spydertrader