For clarification purposes: FRV = 3 times Dry Up (DU) Volume. It is the First Rising Volume (FRV) that causes the price to break out. We use DU Volume by 11:00 AM as our indicator that FRV is LIKELY to occur - since stocks that hit their DU Volume by 11:00 AM NORMALLY reach FRV by end of day. Dkm may have inadvertently merged two definitions together. I STRONGLY urge anyone new to Jack Hershey and his methods to review the posted links and the numerous documents created by Jack.
You arrive at the Hotlist stocks (today we have 5 - ESMC, PMTI, CRDN, ENWV and PETD) by first using the stocktables.com criteria. The resulting list (normally around 100 - we had 81 if I recall correctly) is used to produce 3 lists of ten stocks (from the top, middle and bottom of the stocktables.com sorting). I think you have this correct from my reading of your question. These three lists correspond to different stock 'scores' used by Jack Hershey. Each score represents a particular point on a stock chart cycle. Attached, please find an example of scoring as it relates to a stock cycle. Jack uses Price (P), Volume (V) and Accumulation / Distribution (A/D) to determine a 'score' for a particular stock. Using binary scoring, and the P,V relationship, Jack uses a formula to obtain a score. The formula Jack uses to 'score' the stocks can be located here: http://sputnick5.www8.50megs.com/ The stocktables.com web site automatically scores the stocks for us when we create our three lists of ten stocks. I hope that provides some clarification for you. - Spydertrader
My apologies. Your statement is correct. What I should have said was "reach DU by 11am and ideally reach 3*DU by the end of the day". Sorry for the confusion.
In a previous post, I described the various methods used to calculate dry up volume. I seek to determine which method BEST calculates DU and correctly anticipates a breakout. I hope to reach a conclusion by the end of this year. All the stocks in the 'Watch List' are in one form of dry up or another. Different formula used to calculate dry up levels results in different DU levels calculated for the same stocks. The watchlist I posted has several stocks in dry up according to the Chart Script at Wealth-Lab. Comparing the results of ANIK from yahoo historical data, ANIK had a volume Friday of 17,100 shares vs. a DU volume of 42,400 shares. Since the ACTUAL volume was less than the DU Volume for ANIK, we consider the stock to be 'in dry up.' Some of the stocks in the 'watch list' may not fall into the dry up category as defined by the chartscript at Wealth-Lab, but DO fall into dry up based on other DU Formula. In an effort to prevent confusion in this journal, I provided one easy to use method (and mentioned several other methods in subsequent posts). When I determine the BEST method for DU Volume Calculations, I will share the results. For now, I continue to track several methods, but primarily use Chart Script at Wealth-Lab. Jack Hershey uses 'eyeball' and several equations for TC2000. I hope the above provided you adequate clarification. - Spydertrader
I think what newtoet is asking is after you get your three lists of ten (using stockcharts), how do you cull that to the final five (or whatever the number ends up being - in your example above it was five). Are those five the only ones out of the three lists of ten that meet the requirements you list for float, volume, etc (I think you listed four)?
I apologize for my confusion. Yes, I understand the question now. Thank-you for the clarification. Today's Hotlist contains only stocks that meet our selection criteria. We start with some 10,000 different companies narrowing the field to about 100 or so from the stocktables.com web site using the criteria mentioned previously (high eps and rs rank). We then narrow the field further to 30, and finally to 4. I have seen the Hotlist contain as few as 2 stocks, and as many as 15. We arrive at our Hotlist by running all 30 stocks (from the three lists) through the Chart Script at Wealth-Lab keeping only those stocks that have a rank (at this point we were left with five stocks). Then we check our final exclusion criteria (float, positive EPS, etc.) to make the final cut (at this point we would have 4). Jack Hershey monitors his Hotlist to look for stocks to trade based on the parameters previously mentioned. I compare the Hotlist to the 'Final Universe' list (attached to a previous post) comparing DU values for each stock (via Chart Script) to the previous trading day volume. Any stock in the Hotlist NOT already in the final universe list, I add and monitor daily. Any stocks from the 'final universe list' in DU I place into the 'Watch List' and monitor via Quotetracker. I hope that clears things up. Again, I apologize for my misunderstanding. - Spydertrader
Again, perfect. No need to apologize - you are putting in a lot of effort here and showing a lot of patience. I for one am gaining alot. So, thanks. And I am sure there are more questions to come.
Spyder, GREAT to see you... I'm still kicking and will have a spreadsheet up shortly which will allow for automatic selection of the groups 1, 0, 7. The user will feed the sheet their universe of 120+ names daily... More to come... G33M4K
GMAI gapped down huge (-13.9%). Volume exceeded dry up levels at 9:41 AM triggering an alert from my monitoring and charting software (Quotetracker). MACD: -.2057 Stoch: 10.3348 Price: $12.23 While it is true, Volume exceeded Dry Up (DU) prior to 11:00 AM, we do not take this trade. Remember, we look for 'price improvement as well, and we do not have that here - quite the opposite. Therefore, we eliminate GMAI from current consideration and focus on the other stocks in our list. The next logical question would be: "Couldn't we have shorted GMAI?" The answer is "Yes", but we have a very good reason for not doing so. Jack Hershey briefly mentioned the ability to short stocks with his system in the thread I posted regarding methods for daily analysis. Jack was unable to expand on these 'shorting methods' prior to the thread being closed. The VAST majority (in fact almost all) of the documents and posts refer to The Jack Hershey Equities Method as a 'trading from the long side only' strategy. The majority of this journal will focus on the long side as well. In inandlong's thread located here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=23543&perpage=40&pagenumber=2 I posted results for July and August 2004. I also observed that stocks with large price gap openings failed to perform as consistently as other trades during that same time period. Therefore, I have chosen NOT to trade signals that include opening price gaps of 10% or greater. Since GMAI gapped downward 13.9%, it falls outside my short trading parameters. This does not mean I feel the price of GMAI won't continue to fall. In fact, you may have a very good rationale for thinking the price will continue to drop. Since the trading rules I have set, don't allow for me to take this particular trade, I need to sit on my hands and NOT take the trade. My point here is we want to avoid 'predicting' what the stock will do, and start to 'anticipate' as Jack says, the likely path the stock will take. Know your own trading rules and stick to them. Trading isn't about being 'right,' Trading is about making money. To reiterate: For the purposes of this Journal, we will focus primarily on The Jack Hershey Methods as trading from the long side - with an occasional focus on shorts. If our rules don't permit a trade to occur, then we WILL NOT trade. I Hope you find the above useful. - Spydertrader