Spydertrader's Jack Hershey Equities Journal

Hi Spydertrader -

Good trade in VPHM - your exit @ $21.07 seems to me like a good decision as the stock is a bit extended & deserves at least a rest - sideways - if not retracement to 200dma.

As for IRIS - its been very good to me since my entry on 8/25 @ 17.01. I've hedged the position a little - OTM Calls on 40% currently.

I doubt I'll hedge any more as its broken out big time today - thanks again for your highlight of this stock - it was already on my screening but I elevated it & have also day traded it as a result of your work.

Good Trading & Good Health !! cowpok

PS - For the Phils & Indians its wait til next year - I'm in morning

 

FROM BRIEFING.com
12:14 IRIS IRIS Intl Receives order from U.S. Department of Veterans Affairs for instrumentation in 17 facilities (20.54 +1.54)
Co announced that it has entered into a five-year purchasing agreement with the Veterans Integrated Services Network V.I.S.N. 16 region of the U.S. Department of Veterans Affairs, for an order of 23 fully automated and semi-automated urine analyzers for the agency's healthcare centers. "In addition, an agreement of this size helps offset the anticipated seasonal trend of lower international instrument sales the Company traditionally experiences in the third quarter."

Good Trading & Good Health cowpok

 

Question:
How do you hedge a long position with a Call?

 

2005-10-04, Tuesday - EOD Update

Only JMDT out of our list of Dry Up Stocks exceeded FRV levels by EOD.

- Spydertrader

 

To create the following lists of stocks, I used 90 RS and 80 EPS. Using 90 RS and 90 EPS resulted in an initial stocktables.com sort of too few equities.

2005-10-05, Wednesday - Lists

Hershey Wealth-Lab Chartscript Culling Methodology
Hershey Equities Rank V 3.0.0 / Qcharts Culling / Stocktables.com Sort

Hot List

DPTR FORD GMXR HANS LUFK VIVO VPHM

Dry Up Stocks

CKCM FORD SNHY VPHM

Hot List Stocks Scores

DPTR - 2
FORD - 0
GMXR - 0
HANS - 0
LUFK - 2
VIVO - 0
VPHM - 2

Dry Up Stocks Scores

CKCM - 2
FORD - 0
SNHY - 0
VPHM - 2

Keep an Eye on These Stocks

VDSI (Attached)

The following stock has been ADDED to the Final Universe List as of 2005-10-04: HANS.

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=859325>

 

Methodology

In an effort to summarize the methods I use into one easy-to-follow document, I have edited several posts and placed them into one.

First, you'll need to head over to the Wealth Lab web site and register for a free account. Once registered, Click the My Preferences link in the left menu, and set your preferences as follows:

Chart Size: Small
Chart Style: Candlestick
Bar Spacing: 8

Click Submit.

Next you'll need to bookmark a few chartscripts and scans. Bookmark all three of the following by clicking the Bookmark this Chartscript link for each:

Hershey Equities Rank v. 3.0.0
Hershey Equities Rank SCAN v. 1.0.0
Hershey Equities Dry Up Volume Scan v. 1.0.0

Next highlight and copy The Final Universe List. Here is the most recent list:

CKCM CMT CTHR DCAI DPTR ENER FORD GMXR HANS IIG IRIS JMDT LUFK NFLX NGAS NGPS RATE RTSX SNHY STV TRGL VDSI VIVO VPHM

At the Wealth Lab web site, click on My Watchlists in the left menu. To create a new Watch List, click the link titled: Click here to create new watchlist Enter a name for the watchlist (Hershey Final Universe or any name will do) and then right click and paste the symbols (of the Final Universe) into the next box, add a description if you desire then submit.

Daily List Creation

Log onto the Stock Tables 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 > 90
EPS > 80
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 a number of stocks as close as possible to 100.

Download the data in Excel Format (You'll need WinZip or another extracting software to open the data) onto your computer hard drive and Unzip the data. Once unzipped and opened, highlight the symbols only, right click and copy.

Now that we have our Initial Universe, head over to the Wealth Lab web site, log in, and click on My Watchlists in the left menu. To create a new Watch List, click the link titled: Click here to create new watchlist Enter a name for the watchlist (Hotlist or any name will do which differentiates it from The Final Universe List) and then right click and paste the symbols (of the Initial Universe) into the next box, add a description if you desire then submit.

Go back to "My Watchlists" and the new watchlist you just created should be listed there. Next click on link "Watchlist Scans" which is just 3 lines above where your watchlist is displayed.

Highlight The Hotlist Watch List (the one you just created) in the left drop down box and highlight Hershey Equities Rank SCAN v. 1.0.0 in the right drop down box. Then click "Begin Scan"

The scan will generate a list of all stocks In the initial sort which meet the criteria for cycling minimum of five times in six months. Copy this list and manually confirm each symbol meets the following criteria:

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.****

You can either use a free fundamental data source (Yahoo, MSN) to manually cull the list, or for increased speed, use QCharts. I use Qcharts. For a free month of Qcharts, send a PM to SVRZ. He can send you the link for the free month.

Once you have completed the process above, you have your daily Hotlist of stocks. We now compare our Hotlist to the Final Universe List. If any stock in the Hotlist does not find itself in the Final Universe List, add that stock to the Final Universe List. If all stocks in the Hotlist exist in the Final Universe List, do nothing, and move on to the next step.

Final Universe

Go back to My Watchlists and the Final Universe watchlist you created earlier should be listed there. Next click on link Watchlist Scans which is just 3 lines above where your watchlist is displayed.

Highlight The Final Universe in the left drop down box and highlight Hershey Equities Dry Up Volume Scan v. 1.0.0 in the right drop down box. Then click Begin Scan. The scan will generate a list of all Final Universe stocks that meet the criteria for being in volume Dry Up for that day.

Copy this list and run each symbol manually through Hershey Equities Rank v. 3.0.0 which you bookmarked earlier. This will generate the figures you need to know for low band dry up volume, average dry up volume, and high band dry up volume, first rising volume (FRV), and peak volume. It will also show the symbols rank and score in the top left of the chart.

Using Medved Quotetracker, Qcharts or similar charting software create a watchlist or portfolio of the stocks in Dry Up for that day and set alerts for low band volume for each symbol. Set the chart to monitor on a 30 minute time frame. Add the following under the candlestick price chart: Volume, MACD Histogram (5,13,6), and Stochastics (14,1,3).

You have a signal to go long, once volume exceeds the low band threshold for an equity, price is higher than previous day, MACD Histogram is positive and Stochastics (%K) is above 80.

With respect to when one should exit, I have several rules, and each should be used depending on where we find ourselves in the price cycle.

1. First Day (Ross's Rule)

After entry - Exit when a 2% loss in equity price occurs (from entry price) or price heads into the negative (red) for the day (not since entry, but compared to previous day close). This is known as Ross's Rule.

At EOD - Exit if volume does not exceed FRV prior to the close.

2. Beyond First Day

Trailing stop - Exit anytime the 5% trailing stop is hit. If using an alternate stop strategy, exit when stops are triggered.

3. Peak Volume

Exit within the first 15 to 30 minutes on the morning after peak volume is reached.

4. Price Target

Consider an exit when price reaches the target price of 10%. This is more of a soft exit and requires an analysis of price location with respect to trendlines (Jack's and Nwbprop's Channels), how far the price has appreciated the entire run up (not just since entry), determining if the stock gapped up or not, and continued (or nonexistent) increases in volume.

5. Time

Exit after four days if no other exit criteria have been met. Jack Hershey uses a six to eight day time stop.

The above represents a brief overview of the methods I use. I highly recommend reading through the Journal (at least once) and background material in order to gain a complete understanding of the nuances associated with these methods. Once you have developed an understanding of the process, practice trading the methods on a stock market simulator until you achieve consistent profitability. When you decide to trade these methods with real money, use a broker that offers per share pricing and use small share size initially. I currently trade through MBTrading and highly recommend their services. The combination of fast executions, low commissions and outstanding customer service provides a trading environment quite difficult to beat.

Good Trading to you all!

- Spydertrader

 

When I posted my first comments to this Journal just over one year ago, I never anticipated continuing the process beyond a few weeks. The level of interest generated amazed me. The number and quality of individuals contributing created an environment almost entirely free of the problems which had infected so many of these types of discussions in the past. As interest grew and the number of contributors increased, what began as my way of "paying forward" the knowledge I received, transformed into a collaborative iterative refinement process. As the number of individuals contributing increased, the benefits experienced multiplied. Together, we created an entire collection of information for the sole purpose of assisting a trader towards profitability in trading.

Many individuals have contributed to the success of this Journal over the past year. While time constraints prohibit listing the names of those who participated, I appreciate everyone who posted - sharing their ideas and efforts freely. Without the contributions made by so many, The Journal would not have experienced such a high level of success. In addition, I need to thank the Elitetrader Moderators (especially Magna) for their tireless efforts in assisting all of us in our attempts to keep the Journal on topic.

What a truly incredible journey we have experienced. However, the time has come to bring this journey to an end and begin another. As a result, I plan to close this Journal. I still plan to trade each day the methods outlined within the many pages, but without posting each day my watchlists and analysis. Unfortunately, I can no longer budget the time required for this process.

In order to accommodate anyone with a desire to ask questions, provide commentary on their results, or contribute to this ongoing process, I have started another Journal where I plan to only occasionally update my trading results. As always, I welcome any comment or contributions, and encourage participation. Feel free to post your own lists and commentary in that forum.

Finally, I have attached The Journal Results file below. The file contains the results of ALL Journal trades during the last year. I have included an equity curve for those with an interest. Good trading to all of you, and I look forward to seeing you all in the next Journal.

Spydertrader