2005-05-20, Friday - Update Our system triggered one possible signal today when actual volume for EXM exceeded calculated Low Band Dry Up Volume at 10:41 AM. While we did see price improvement at time of signal generation, and MACD fell within desired parameters, The stochastic Indicator failed to provide desired levels. As a result, we eliminate EXM from further consideration. The particulars for EXM at time of signal generation were as follows: Time: 10:41 AM Price: $15.30 MACD: +.0273 Stoch: 79.0569 Score: 0 Low Band: 53,369 shares We received no additional trade signals from our list of Dry Up Stocks this morning. - Spydertrader
Regardless of what stocktables.com gives u for a reading on EXM... the stock is clearly in a serious downtrend. You should create a filter and only trade stocks above their 50 day SMA. The RS reading in stocktables and IBD can be misleading because its based off 12 month history.. the 50ma filter.. will avoid stocks in a downtrends. Logically u do not wanna to be in weak stocks because u are screening for the best quality.
You do realize the above advice prevents me from taking the recent ELOS trade. Should I give the money back? - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=752597>
Now that you have finished editing your post, let's apply your advice to another recent trade "clearly in a downtrend." <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=752613> While your recommendation may provide your own trading with an added degree of profitability, I respectfully suggest you refrain from dispensing advice on a methodology that clearly you have yet to fully comprehend. - Spydertrader
It was just a suggesetion not an attack. You dont have to be rude about it. I'm sorry I dont want to spend 400 hours reading Hershey's old posts to learn how to use this trading methodlogy.. last time I remember Hershey was banned from ET and then he made a reappearance under the handle Grob. Why do u have a journal? Most reasonable people have one.. so others can learn and share. Yes, your journal is doing great.. and might be one of the best stock journals on this forum. But what bothers me is your position sizing of relatively half the account in one high voloatility stock holding overnight... and the fact that you are are allowing to screen for stocks that are in serious technical downtrends. I wish you continued success.. I will not post in this journal any longer.
Hello: I'd like to mention something here. I am one of those who have not read all of this journal, nor have I read much of Jack's original commentary or system ideas. I think however that I have an understanding of the concept(s) based on what I see. There is an element of ebb and flow here that is not apparent at first glance. This system takes you in at the "tidal change" so to speak. The signal for this "sea change" is given by the FRV. I don't want to oversimplify, but it makes sense to me that even with a system that tends to put you in just when the "tide" is changing, you still have to do a bit of rowing yourself. This is how I view risk management. I do agree that overnight risk is significant, however one might manage that by using options or hedging using one of the indexes. I think we each have to decide where to draw that line in the sand. Good luck everyone. Lefty
Since its inception, I have always welcomed contributions to this Journal by all interested parties. Many individuals have shared their efforts and offered their contributions as is evident on the many pages contained here including as recently as today. The contributions made by you however present a conflicting picture. You have presented yourself as an individual possessing years of trading experience. Along the way, you no doubt have learned the lessons of hard work, dedication and perseverance. I can only assume you learned how to trade profitably by applying the knowledge acquired during hours of study and analysis. You first appeared in the Journal as someone interested in learning, yet your questions indicated you wanted others to do the heavy lifting for you. Your posts give the impression you want to be handed the methods without any effort on your own part. After witnessing the methods exercised right before your eyes, you want then, to alter the methodology without fully understanding the theory behind it. I do not intend to present myself as rude, and I apologize for that impression. I simply have grown increasingly concerned over your lack of understanding. No one suggested you read through all of Jack Hershey's Posts. However, I did suggest you do what so many others have done, and read through this Journal. The answers to nearly ever question you have posed exists right here in the Journal (often posted several times). Yet, you fail to search for the answers you seek, and instead provide a picture of yourself which is less than sincere. If my responses to you appear increasingly curt, it is because I have no interest in having to defend this methodology, while at the same, teach it. The choice of whatever road you travel remains exclusively yours, yet I encourage you to pick one path and stick to it. Do you want to learn how to use these methods for your own profit (if so, you need to make a greater effort to self study) or do you want to pick the methods apart? I have no problem with the latter, but then don't expect my help with the former. With your many years of trading knowledge and expertise, I have no doubt you could provide valuable insight into trading as a career - especially to those with far fewer years of experience than yourself. At the same time, your many years of trading have created certain biases and viewpoints that simply have no relevance to this particular methodology. I continue to encourage input by all interested parties towards the success of this Journal - including input provided by you. Should you decide to post again, kindly remain mindful of these biases and leave them at the door. I wish you continued success in your endeavors. - Spydertrader
Odelys, I was looking at your pvad trading file and noticed that you account for accumulation and distribution using open and closing price. Did I interpret it correctly? Since scoring didn't seem that essential to the process I kind of skimmed over it. I presumed accumulation/distribution had something to do with the accumulation/distribution indicator similar to on balance volume. I presumed incorrectly? If so, I will have to search for a pertinent reference. Anyway I tried simulating your chartscript on my more limited data and I notice that for the Dow and an emerging market I follow it only seems to break even over the last two years. Also even for some smaller Nasdaq type stocks over the past two years although performing close to 50% it still trails buy and hold. If you used the Nasdaq 100 as a benchmark for the performance in the past decade doesn't that kind of show a bias of sorts since the Nasdaq 100 would most likely reflect some of the best stocks of the past decade? That said did the simple scoring system outperform buy and hold? I don't have the data to do the test myself. From what I have as of now, scoring alone seems kind of iffy as a viable indicator.
The scoring Code Odelys uses for his Testing Script compares Price, Volume and Accumulation / Distribution (A/D) between one bar and the previous bar. It remains the fundamental scoring code used in all The Hershey Chartscripts. Unfortunately, the tools available through Wealth-Lab to correctly provide a binary value for Accumulation / Distribution remain limited at best. We cannot 'import' the red and green arrows used through Stocktables.com to indicate Accumulation or Distribution, and the Accumdist2 Script which replicates Wilder's RSI returns floating point errors when using high volume stocks. A work around provided on the Wealth-lab.com Discussion Boards calls for the comparison of price at open and close to simulate the A/D binary score from the Stocktables.com web site. The G33M4K Master List Scoring Excel Sheets use a similar work around - Warden's Balance of Power - to replicate the binary A/D Score. Jack Hershey uses Accumulation / Distribution to indicate the purchasing or selling of shares by the large funds. In other words, a binary A/D score of '1' indicates smart money purchasing shares, whereas, a binary A/D score of '0' indicates smart money selling their shares. As I indicated in a previous post, if the equities on which the test data is based, do not 'cycle' a minimum of 5 times in six months, one would expect to see a significant reduction in the effectiveness of Odelys' Chartscript. The scoring cycle correlates to a position on an equity's price cycle. If that equity (or equities) in your test data failed to cycle as actively as the equities we use, one would expect to see diminished returns vs. buy and hold. Again, even if one tested the entire current Final Universe List (or even my list of tenured stocks), beyond a certain point, one would need to consider the results suspect. We have no way of determining if at a certain point in time an equity qualified from a fundamental standpoint (EPS, etc.) for trading consideration. By example, simply because TASR made or list of candidates last month does not mean it would have made our list last year. It is for this reason, any successful backtest of the Hershey Scoring System must be called into question. I have to agree with you here. Testing any system during the bubble period of the roaring 1990's can often skew the results more to the positive side. However, testing during the 2000 - 2002 timeframe may yield results skewed more to the negative side. And Odelys stated that one should not use scoring alone as a method for determining buying decisions. He simply wanted to show that it made sense from a certain standpoint to be entering into a long position when a stock has a score of seven, and look to sell as a stock had a score of 4. Of course, other more important considerations come first, but the theory behind the methods make sense and prove effective. In other words, Odelys simply tested a hypothesis: "What happens if I only looked at score?" One might run a similar test that looked at what happens when a bar with a score of zero is followed by a bar with a score of seven. I suspect Odelys would find those results even more interesting. Enjoy the weekend. - Spydertrader