Spydertrader's Jack Hershey Equities Journal

I have traded The Jack Hershey Equities Method for little over a year – full time for the past 2 months. I have found my results to be quite extraordinary – enabling me to quit my full time job and trade these methods as my only source of income.

Due to several requests, and in an effort to further refine my own trading results, I have decided to use this forum to document my trades using The Jack Hershey Equities Method. In the spirit of “iterative refinement,” I welcome all participants – especially commentary that helps to improve upon my own results. Feel free to use this journal to post your own trades, to submit ideas, to contribute helpful techniques or to learn more about The Jack Hershey Equities Method in general.

To provide a framework for others to follow, test the strategy for themselves, and to allow for meaningful on topic discussion, the methods I will use for stock selection criteria can be found in the next post.

I hope you find the information contained in this journal useful.

- Spydertrader

 

The following describes my interpretation of the trading approach described by Jack Hershey on Usenet, several MSN Web Sites, and the EliteTrader.com web site. The contributions of Jack Hershey, Don Cameron, David Marshall, Nwbprop, Vorzo, JVBraun, inandlong, Max Gainz, Supahfly, and many others have also been included to clarify or to augment the process with automation. Many thanks to all for the many hours of work freely contributed by everyone involved.

The “Jack Hershey Equities Method” seeks to produce a trader who can reliably make 10% about every two weeks (6-8 trading days) trading equities either part-time or full-time. One can obtain background information, and a complete discussion (both supporting these methods and decrying these methods) available at the following web sites, discussion threads, and / or Google Archives:

http://groups.msn.com/JackHersheysStrategies/general.msnw?action=get_threads

http://sputnick5.www8.50megs.com/

http://mycoolstars.hypermart.net/

http://groups.msn.com/ShortTermStockTrading/_homepage.msnw?&pps=k

http://www.elitetrader.com/vb/showthread.php?s=&threadid=23543

http://www.elitetrader.com/vb/showthread.php?s=&threadid=21354&highlight=Hershey+Equities

http://tinyurl.com/6956z

I strongly urge reading the enormous volume of information supplied by Jack Hershey and others archived at the above locations. After reviewing the above web pages and an entire library of documents associated with The Jack Hershey Equities Method, you may notice two variations on ‘creating the initial universe of stocks.’ The first method utilizes TC2000 software and numerous equations to develop the various lists. Jack has described this method in the past, but currently teaches his methods utilizing the stocktables.com web site. The following procedure involves using the stocktables.com web site as well.

Log onto the http://www.stocktables.com web site. You can utilize the two-week free trial to avoid paying for a subscription. The following settings will produce a list of stocks we will call the ‘initial universe.’

RS > 80
EPS > 90
Dollar min 10
Max dollar 50.

All is everywhere else.

Sort by % Volume Change.

Your initial list of stocks should total near 100. Alter the RS and EPS settings to achieve the number. We now create three lists. Each list signifies a score for the individual stock. The scoring process uses the Price, Volume and Accumulation / Distribution relationship. Jack Hershey uses a binary scoring system. The stocktables.com web site version of Jack’s Methods creates three lists already scored – zero’s, one’s and seven’s.

The First list of 10 stocks comes from the bottom of the list working your way up, filtering out stocks with Volume < 200,000. The Second list of ten stocks comes from the top and working down, selecting only stocks with price gains. The Third list of 10 stocks comes from the middle of the stocktables.com chart where the volume change is zero. Take five stocks above and five below the middle zero selecting stocks that have greater than 200,000 volumes.

The short list from the bottom I entered as portfolio "1's". The short list from the top I entered as portfolio "7's".

1's are the bottom ones. The top ones are 7's. The middle ones are 0's

Then rank all thirty of the above stocks (three lists of ten) using:

http://www.wealth-lab.com/cgi-bin/WealthLab.DLL/editsystem?id=32994

Stocks that return no rank are given a rank of zero. Keep all the stocks that have a rank (other than zero), and sort them from highest to lowest rank.

You will then have created your top 10 "Hotlist"

Then you must: Eliminate any stocks that do NOT:

1. Have a float less than 60,000,000

2. Have a float greater than 5,000,000

3. Have a 65-day average volume above 200,000 shares

4. Have positive EPS.

****Remember: The above 4 points MUST apply to the stocks you KEEP. If the stock doesn't have the above 4 criteria, you MUST eliminate the stock from your Hotlist.

Mark the Dry Up (DU) Value for each Hotlist Stock. When a stock reaches DU Volume on a particular day, then reaches the same volume by 11:00 AM the next day, while in an uptrend, it is a signal to go long the stock. First: MACD (5,13,6) needs to be in the green. Second, I want to see The Stochastic (14,1,3) in the 75 range or higher. Third, price should be increasing. Sell in 4 days OR when the stock appreciates to 10%.

Stops should be placed at 5% below the equity price.

Each day, work through the above procedure - saving the Hotlisted stocks into a file called ‘Final Universe.’ As you add more and more Hotlist stocks to this file you will notice the number of stocks increasing in your ‘final universe file.’ Run these stocks through the Chart Script at WealthLab.com to determine dry up levels for these stocks as well. Stocks in both your ‘Final Universe’ and the Hotlist file should be monitored for buying signals. Stocks in the final Universe that lose their rank should be eliminated.

The first day you run through the above procedures, you will only have the ‘Hotlisted’ Stocks to evaluate. Each consecutive day, as your ‘Final Universe’ of stocks grows, you will have an increasing number of possible buying opportunities.

Currently, my ‘Final Universe’ contains 32 stocks. When a stock appears in my daily Hotlist NOT appearing in my Final Universe, I add that stock to the Final Universe list for daily evaluating. When a stock loses its ‘rank’ (by failing to maintain 5 cycles of 20% price improvement in a six month period) I remove that stock from my universe list.

The above is an overview of the methods I use. A more detailed explanation can be found within the many documents and posts located at the above web sites. Should anyone require additional clarification on any of the procedure or methods listed above, please feel free to ask me to explain in greater detail.

 

For Monday, September 27, 2004

Here are my lists:

Sevens

ECSI
GDP
NIHD
PETD
RIO
CFC
DECK
TNP
BR
UPL

Ones

CLE
HDWR
ARTI
FTI
LEND
URBN
JOSB
CRDN
CYTC
INSP

Zeros

DRL
BR
ENWV
TNP
DECK
UPL
CREE
CTSH
ESMC
PMTI

Hotlist

symbol score float rank
ESMC 0 4700000 9.22
PMTI 0 12700000 5.24
CRDN 1 13800000 4.59
ENWV 0 6100000 4.41
PETD 7 15300000 3.46

 

Attached, please find a copy of my 'Final Universe' list for Monday, September 27, 2004. The watchlist below contains stocks in one form of DU Volume or another. I will watch these stocks to see if they reach FRV by 11:00 AM Monday. MACd and Stoch criteria also apply to signal a buy.

IDSA
NVEC
ANIK
LSCP
ALDN
EVCI
HANS
GMAI
LIFC
NAVR
SMTS
HLEX

 

Will you be providing a scorecard and post mortems on what DIDN'T work out? I think that would be most helpful. Also, I think it's interesting that your picks are all NAZ. Is that significant?

 

.

 

Great journal - a few questions as I am new to Jack Hershey.

1. How do you calculate the rank that is referenced in your Hotlist? I know it is in the ChartScript, but I would like to understand what the rank means. Also, when I plug these symbols into ChartScript, I show a rank different than what you list - why?
2. Your Hotlist is culled from the 30 - in the example above, are the ones that are on the Hotlist the only ones from that 30 that meet the 4 criteria you list?

Thanks!

 

Regarding the number of stocks currently trading on the Nasdaq Exchange: purely coincidental. There have been times NYSE traded stocks appear on the lists - although not as frequently. Jack Hershey's Methods seek to trade stocks that cycle five times in 6 months. These cycles should appear over 6-8 days and show a gain of 20% or more. Perhaps, the increased level of volatility exhibited on the Naz results in the majority of the stocks being derived from that exchange (my opinion only).

Seeking to improve upon my own results, I created this journal to obtain input from others trading Jack's Methods. Since I will post all trades the system signals, the results will be here for all to critique or applaud. Trades that do well and Trades that do not perform as expected will of course be analyzed by me, and hopefully others following this thread. I agree performing 'post mortems' on all trades provides an excellent benefit to all - including myself. As a result, I encourage input in addition to my own.

Thanks for the great questions, hypostomus.

- Spydertrader

 

Thanks for starting the journal Spyder, looking forward to it. I have been trading the equities method for about a year, so far I have not been able to find the groove yet. The last few months I have concentrated on ES trading and am thinking maybe I have been "inventing" in the stocks analysis. Really glad to hear you are having success with this, I hope to get there too. Some of the things I was doing wrong was chasing 7's, and also trying to catch stocks in the begining of their lower left to upper right price path, did not meet the 5 times/ 6 months rule. Do you find doing it to the letter is most effective, or are there nuances you use. Two things I get from the ES thread that I will try are stop inventing and look deeper in the box.

Thanks again

 

Thank YOU for starting the thread. It'll be great fun to watch and learn. I watch the top ten NAZ every day, but ignore the great seething mass underneath, as they seem to have little relevance to moving NDX.