2005-02-04, Friday - Trade Signal Our second trade signal of the morning came from UBET when actual volume exceeded the calculated 50% pro-rata volume level. Both MACD (+.1118) and The Stochastic Indicator (97.6734) fell within desired parameters. As a result, we enter into a long position with UBET receiving a fill price of $4.98 02/04/05 10:22:21 4.98 4.95 4.98 3100 Target Price: $5.48 Initial Stop: $4.73 If price moves in our favor, we will trail the stop upward to protect any potential profits. - Spydertrader
2005-02-04, Friday - Trade Update Due to price appreciation on both ELOS and UBET, we raise our stop points upward in parallel with improved price. As a result, we now have the following stops: ELOS: $29.85 UBET: $5.00 - Spydertrader
2005-02-04, Friday - Update: EOD Volume for both ELOS and UBET increased into FRV status by the end of the trading day, and as a result, we hold both stocks through the weekend. Continued price improvement on ELOS resulted in an improved stop - now placed at $30.25. Our stop for UBET remains at the $5.00 price point. Our current holdings show an unrealized profit of just over $1800.00 - a rather nice ending to the week. Enjoy the weekend. - Spydertrader
2005-02-07, Monday - Update I apologize for not posting the normal lists this morning, but difficulty with my historical (EOD) data provider has prevented me from creating lists for today. In addition, an early morning news announcement from ELOS pushed shareholders and traders alike into a frenzy before this morning's open. By now, most of you have seen the news and the resulting drop in price, but in case any of you missed it, ELOS illustrates a great example of why one should not panic when overnight news presents an obstacle towards profitability. http://tinyurl.com/63hro The above news link for ELOS indicates the company plans to launch a secondary offering of its shares. Companies often use additional stock offerings to raise additional cash. Normally, this sort of news disappoints current shareholders as additional shares dilute the value of current shares - resulting in a dramatic drop in price. This morning was no exception. Although extremely concerned with the pre-market announcement from ELOS (knowing price would probably blow past our target stop), I waited for the opening bell as I watched the pre-market trades on the http://www.island.com/bookviewer/javaversion.asp web site send the price of ELOS lower and lower. My brain filled with thoughts of "what I should have done or could have done" on Friday to lock in those profits. Fear began to take control as I realized my profitable trade on Friday was about to turn disastrous on Monday, and it would do so in a very public fashion. When I received the opening print for ELOS at $29.37, my heart sank. Right there on the screen I witnessed a great example of the risks associated with holding trades overnight. 02/07/05 09:30:07 29.37 29.37 29.37 15622 As I contemplated selling for a loss right then and there, I walked away from the screen for a moment to clear my head. After all, emotions have no place in trading and I needed to think clearly. After calming down, I calculated the gap open at almost 10% and realized ELOS had now placed itself into the "large gap open" rule. You may recall that we do not purchase or 'short' stocks that gap by such large amounts as they often fail to perform as desired. The old adage of "most gaps fill" (meaning price often moves back to "fill" in the gap created at the open) would apply here if many of the traders and shareholders panicked this morning (as I almost did) and sold as soon as possible at the open. As a result, I decided to take the action often most difficult for me - sit on my hands and wait. As I watched price begin to quickly move upward to fill the gap, I felt fear turn to confidence. The increasing level of confidence I felt resulted from two aspects of this morning's action. First, price began to move in our direction improving the likelihood of a profitable outcome, and second I felt the satisfaction of not succumbing to fear and not allowing that fear to determine the outcome of the trade. Over the next 12 minutes, I watched price move upward and upward and pass our stop to the good side. Recognizing the reasons for taking the trade in the first place had now been overridden by news of a secondary offering, I needed to exit the trade before greed attempted to influence the decision making process. As a result, I exited at $30.61 for a per share profit of .72 cents. 02/07/05 09:44:07 30.61 30.61 30.61 700 While our trade ended with a gross profit of $504.00 USD and a 2% gain, the lessons learned far outweigh the cash earned. Relying on one's experience when trading, even in times of crisis, prevents the making of emotional and unprofitable decisions. Fear, greed and that sick feeling one gets when watching their own money seemingly wash down the drain prevent clear and rational decision making, and may result, in decisions detrimental to one's success. Nobody likes to lose money, but in this business, we will all experience loss at one time or another. How we deal with the emotional aspects in trading plays an important role both in the number and severity of losses we experience. Had I not listened to my experience and allowed fear to continue to dominate my thinking, I would have experienced a painful and unnecessary loss. Instead, making the correct decisions in the face of mounting obstacles and fear reinforced my confidence and belief in my own abilities - regardless of the profitable outcome. After concluding my focus on ELOS this morning, my attention turned to UBET. Price continued to improve on UBET as did volume, and it appeared as if we might exceed our target price before noon. By 10:30 AM, we had exceeded our target price, but volume still appeared strong. As a result, I decided to once again make the decision to wait. Fifteen minutes later both price and volume improved resulting in another jump in the price of UBET. Again, not wanting to allow greed an opportunity to dominate my thinking, I placed a sell order on UBET near 11:00 AM. 02/07/05 11:00:07 5.70 5.70 5.70 3100 The resulting sale of UBET provided a gross profit of $2232.00 USD and a 14% gain - our best percentage gain since the journal began. Although our sale of UBET resulted in significant gains, price on UBET may continue higher if volume continues to improve. As a result, we may find we sold UBET too early. If so, then I need to recognize the possible influence this morning's experience with ELOS played in my decision to sell UBET, and work to eliminate such influences in the future. I hope you find the above information useful. - Spydertrader
Great post Spyder. Good points, and you write well. I often find watching intraday data alters (always for the worse) decisions I had made to buy and sell at certain prices using EOD data. Trends in the intraday data often go against the more significant trends in the daily data, and have worsened my decision-making, though I'm getting over it. Farley calls them 'trend relativity errors' in his Swing Trading book. Good call on waiting for the rebound. PS: These last two weeks have been great haven't they? I use Hershey principles as the basis of my system, though slightly different indicators (posted earlier on this thread). Portfolio up 12.5% for the last 8 days (sorry, bragging)
No need to apologize. Congratulations on your success. I have no doubt Jack Hershey would derive enjoyment knowing the fact that his principles assist your ability to profit. Keep up the great work. - Spydertrader
Spydertrader, I'm hoping you can comment on these observations. I have not committed capital yet but am going through the process every day. Did you make any trades today? ELIT - Most recent quarter was negative and probably shouldn't be on the hotlist, but everything else worked nicely. ANTP - This rocket couldn't be stopped. Before the news hit the wires, this was up a buck at least. Hard to catch, but will be interesting to watch. ANGO - another classic BO. I am finding that without using a pro-rata volume and simply sitting there and watching for at least an hour, you are probably cutting profit in half or more. I would be wary of chasing these, though of course we expect others to chase them if we're looking for a 4-6 day hold. What do you think of NGPS's chart? While it otherwise fits into the Hershey system, I don't think it quite fits the spirit of the Hershey system, even if you have the requisite moves in the past. I suppose if it pops, it could be a nice run though. Also, have their been any comments about how this performed during the bear market? I expect a high number of false breakouts in that scenario. Thanks.
The market will be ready and waiting for you when you decide to risk real dollars. There is no rush. Other than closing out Friday's trades held over the weekend, no I did not. It isn't on my hotlist, but in case you have a typo in your post, glad the trade worked for you. Looking at my EOD chart, I can see how this would have made a nice trade. Although, I may have passed due to the low float. Agreed. Although float issues may have prevented me from taking this trade as well, many followers of The Jack Hershey Equities Methods allow for some 'wiggle room' when it comes to float. Sometimes pro-rata volume works, and sometimes it flops bigtime. I feel each individual trader needs to find the balance between risk and their own comfort level when determining which volume levels trigger an actual trade. You correctly observe the lack of a "classic pullback pattern" associated with the chart of NGPS. Having said that, NGPS made several of the lists posted below, and has a "Master List Score" of zero. With such a low volume level yesterday, any volume increase might result in a subsequent price increase. DKM posted his results using Jack's Methods during the height of the bear market. I believe the file can still be located on the MSN web site. My own experience has shown fewer signals and signals of less intensity occur during bear (or downward trending) markets. It was for this very reason, I shortened my hold time to 4 days. Of course YMMV. You're Welcome. - Spydertrader
2005-02-08, Tuesday - Lists I used RS and EPS Settings of 90 for the following lists Sevens - Ones - Zeros NNI - NGPS - FLSH EZPW - IPXL - CCJ DTPI - NTAP - ISRG MIPS - VCLK - SNDA MSB - UTHR - CMC ANGO - PMTI - FFIV PTRY - HOLX - TOPT HLIT - LCAV MFLX - VTIV ANTP Hotlist ANTP NGPS ANGO MFLX TOPT EZPW MIPS HLIT SNDA IPXL FFIV PMTI Watch List GOAM - Du Cycle - Du5 PACT - Du Cycle - Du5 TASR - Du Cycle NGPS - Du Cycle - Du5 IDSA - Du Cycle - Du5 KEYW - Du Cycle TOPT - Du Cycle EBKR - Du Cycle - Du5 COGT - Du Cycle - Du5 - Du10 - DU20 ESMC - Du Cycle - Du5 - Du10 - DU20 JUPM - Du Cycle GMAI - Du Cycle HRT - Du Cycle - Du5 - Du10 ULBI - Du Cycle IPXL - Du Cycle - Du5 MT - Du Cycle BLTI - Du Cycle - Du5 SRVZ Wealth Lab Equations - Dry Up (with G33M4K Score) EBKR - 3 ESMC - 5 NGPS - 0 TASR - 3 Gallas2 "Keep an Eye on These" Stocks SINA (Attached) Dry Up Stocks with G33M4K Master List Score of Zero GOAM PACT NGPS COGT GMAI HRT ULBI IPXL (GOAM, ANTP, NGPS, ANGO, HRT, IDSA, MT, HLIT have float outside normal parameters) The following Stocks have been ADDED to the Final Universe List as of 2005-02-07: IPXL. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=683056>