I entered a trade on SPTN this morning. I did not have a chance to look at it until around Noon. It was up .15 from the previous days close, it was twice the DU value, the MACD was positive and the stochastic was 83. I bought at 10.95. At EOD it had met FRV but was down to 10.83. I held the position.
2005-04-11, Tuesday - Update Where do I begin? Actual volume needs to exceed calculated Dry Up Volume prior to 11:30 AM. According to my data provider, this did not occur. Actual volume on SPTN held at 23,139 during the 11:30 AM timeframe. I also show a negative MACD (-.0085) during this period, but this could be due to data source variances as well. Also, I show a Stochastic Indicator well below our desired parameters (61.3422). While using the Low Band for Dry Up yields and actual volume in excess of FRV levels, using Average Dry Up Volume does not. In addition, not "[having] a chance to look at [the market] until noon" probably isn't the best methodology to use for trading. I continue to advise individuals to trade via a simulator until such time they can trade profitably with fake dollars. While simulated trading provides little experience in the psychological aspects of having ones own money at risk in the market, simulated trades can offer proof as to whether one has followed the system correctly or not. Until a trader has learned his or her system (any system) in its entirety, placing trades with real money invites increased risk of ruin. According to the methods I have outlined in this journal, our system failed to generate any trade signals today. Actual volume failed to exceed calculated Dry Up Volume prior to the 11:30 AM timeframe. As a result, I took no action with respect to trading long or short today. I hope you find the above information useful. - Spydertrader
SPTN traded 29,487 shares the first ten minutes of trading. By 11:30AM EDT, it had traded 47,919. I verified this from two different sources. This was well above your Chartscript "low" DU figure of 19,775 and well above the 23,139 you obtained from your "data provider". A 5-13-6 MACD was positive all morning, although only slightly so. You wrote: "While using the Low Band for Dry Up yields and actual volume in excess of FRV levels, using Average Dry Up Volume does not." I'm not sure what you're saying here. It sounds as though you mean that three times the Average Dry Up Volume must be used to gauge FRV at end of day. This is what you wrote yesterday when asked the same question: "If we used a "Low Band" for Dry Up, we use three times "Low Band" for FRV." EOD volume for SPTN was 86,882. This is well above 3x19,775 which was your low band DU figure from Chartscript. While my not looking at the market until Noon may not be an acceptable methodology of trading, in this instance it would not have made a bit of difference. The indicators were the same at Noon as they were at 11:30.
Interesting. After checking three different data sources, one of the three indicates even greater volume within the first ten minutes than your data sources provided. Both of my data sources show only 13,750 shares within the first ten minutes. The attached chart shows the indicator levels as I observed them using a thirty minute chart. Evidently differences in the data providers resulted in both you and I observing different signals. Now to avoid any additional confusion which may have resulted from my explanations, allow me to reiterate: Use of the Dry Up Volume Range (Low / High Bands) requires additional testing and analysis before a definitive trading methodology can be relied upon. When asked during a recent phone conversation how I thought the Chartscript would best work using the Dry Up Range, I suggested using the low band as a trigger, and Average Dry Up Volume (and its corresponding FRV levels) as confirming indicators. Failure for actual volume to exceed these levels would result in an exit signal for a wash sale. I have also indicated one could use the low band (and its corresponding FRV level) for trade triggers. However, as I indicated in your first round of questions: Good Trading to you. - Spydertrader <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=726197>
2005-04-12, Tuesday - Lists I used RS Setting of 90 and EPS Setting of 80 for the following lists Stocktables.com Sevens - Ones - Zeros APCS - FFIV - DHC HMX - UNT - NXTP CHTT - LSS - XXIA MSB - CCJ - GDP MCRI - ATVI - JLL QSII - MIPS - HOLX ADEX - AFFX - AAPL XTO - AEOS - USG CYCL - URBN - ANTP JLL - GEOI - MACR Wealth-Lab Chartscript/Manual Hotlist GEOI ANTP XXIA MIPS USG MCRI MSB FFIV GDP Wealth-Lab Data/Yahoo Data Watch List DCAI - DU Cycle - DU5 - DU10 - DU20 TASR - DU Cycle - DU5 FRD - DU Cycle - DU5 - DU10 SYNA - DU Cycle - DU5 MFLX - DU Cycle - DU5 - DU10 - DU20 ELOS - DU Cycle MIPS - DU Cycle - DU5 SIGM - DU Cycle - DU5 BLTI - DU Cycle - DU5 - DU10 EZPW - DU Cycle TOPT - DU Cycle - DU5 JUPM - DU Cycle - DU5 PARL - DU Cycle - DU5 FFIV - DU Cycle - DU5 ISSC - DU Cycle ULBI - DU Cycle CALM - DU Cycle LCBM - DU Cycle Wealth-Lab Developer Data & Equations/G33M4K Equations SRVZ Wealth Lab Equations - Dry Up (with G33M4K Score) EZPW - 4 FRD - 2 Eyeball Gallas2 "Keep an Eye on These" Stocks DCAI (Attached) Yahoo Data/G33M4K Equations Dry Up Stocks with G33M4K Master List Score of Zero DCAI ELOS SIGM BLTI TOPT JUPM FFIV CALM Wealth-Lab DU Volume Range - Hershey V2.0.1 / QCharts Data Dry Up Stocks and G33M4K Master List Score BLTI - 1 DCAI - 4 FFIV - 0 FRD - 2 JUPM - 6 LCBM - 2 MFLX - 2 MIPS - 2 PARL - 5 PMTI - 7 SIGM - 0 SINA - 0 SNDA - 0 SYNA - 7 TASR - 5 TOPT - 2 Stocktables Sort/Qcharts/G33M4K Equations/ Test Culling Method with Score Hotlist DCAI 0 ELOS 0 FFIV 0 USG 0 FORD 2 GDP 2 MFLX 2 MIPS 2 TRGL 2 XXIA 2 EZPW 4 PARL 5 GEOI & ANTP failed to make the Final Universe List due to insufficient float. The following Stocks have been ADDED to the Final Universe List as of 2005-04-11: MSB. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=726199>
I would have to strongly agree with this statement. I have been studying the Hershey method since November and have been paper trading since March 1st and I learn something new almost every day, having made a number of dumb mistakes. Spydertrader, This is the first I have heard that you looked for volume to exceed dry up at 11:30am as opposed to 11am, which is the trigger time the majority of literature on the subject and your early posts seem to indicate. Did you start with the 11am cutoff and change to 11:30 when the pro-rata concept was introduced, or was it always 11:30am? Also, I wanted to mention to all following the Jack Hershey method out there; As mentioned above, I have been paper trading since March 1st and remain profitable through today's date (although no where near the win/loss ratio that Spydertrader has). This supports (so far) my already strong belief that this system has very good potential, if used properly. Now to get that win/loss ratio to Spydertrader's level! Good luck, smtrader
I wonder if the volume discrepancies are the result of an overnight session being included in the data I was looking at and not included in your data. I don't know a lot about overnight trading of stocks. I see references to it but know nothing of the details. 20,000 shares still seems like too much for this particular stock, even if it did trade overnight. There was no major after-market news attached to it that I could see. I have an idea regarding the difference in indicators. When looking at the MACD and Stochastic, to determine if a buy signal exists, what period chart do you use? Indicators look totally different if looking at daily, 10 min., 30 min. or whatever, which I'm sure you know. You wrote that the Average should be used as confirmation, if the low band is used as the trigger. Is this confirmation limited to calculating FRV from Average for the EOD confirmation? Thank you for your help and patience.
I apologize for the confusion. In the beginning of the journal, I used 11:00 AM as my cutoff time for actual volume exceeding calculated Dry Up Volume. After DKM reminded me about Jack's use of pro-rata volume, I changed to the 11:30 AM cutoff. Using the 11:30 AM cutoff simply makes it easier to monitor the various pro-rata volume levels (e.g. 25% @ 10:00 AM, 50% @ 10:30 AM etc.). Glad to see you have enjoyed some success using Jack's Methods. May you continue to enjoy profitability. - Spydertrader
This very well could be the reason for the discrepancies. Normally, both Scottrade and Qcharts include pre-open trades in their numbers. However, I have no trades for SPTN prior to 9:30 AM in this particular case. A couple of months ago, we discussed how the changes in market hours might affect our trading using Jack's Methods. An earlier 'open' might skew the data requiring us to use an earlier 'cutoff' for actual volume exceeding calculated Dry Up Volume. We will need to continue to monitor this situation to determine if a need to alter our methods exists. I monitor the stocks using a 30 minute chart. The chart for SPTN I posted above also uses the 30 minute fractal. The charts I post with my lists each day use the daily timeframe. I use the daily charts each night, and I monitor using the 30 minute charts during the day. I have yet to thoroughly test all the various possibilities. The development of the "DU Volume Range" used in Version Two of my "Hershey Chartscript," resulted from the theory that (with respect to DU Volume calculation) we may be attempting to quantify that which remains unquantifiable. Since Jack (and others) use an 'eyeball' method for determining when a stocks finds itself "in dry up," I developed a theory that Dry Up might actually be a range of numbers rather than one number. Since a stock has a different Dry Up Volume for each cycle, I felt the theory had some validity. In addition, I hoped to develop a method that would encompass the various methods for Dry Up Volume calculation (Dry Up Cycle, Du5, Du10 etc.) into one. The High and Low bands for the range resulted from an attempt to capture a certain number of standard deviations from the mean. In other words, we use probability and statistics to capture the majority of the data. We currently use 1.5 standard deviations (std). Others currently test 2 or 3 std for their calculations. The greater the number of standard deviations used increases the amount of data capture, but it also increases the number of false signals. As a result, I suggested using various levels for confirmation in the same manner one would use FRV levels by EOD or actual volume reaching Dry Up Levels by 11:30 AM, if one entered with pro-rata volume at 10:30 AM. Currently, I cannot provide a methodology that accurately captures the majority of trade signals, while at the same time, provides the fewest false signals. I encourage you to test various uses in order to determine how to best optimize the tools available. As more individuals test and evaluate various aspects of the Chartscript, their input should provide a clear roadmap for how to proceed in the future. For now, (and to answer your question) I believe we are limited only by the scope of our imagination. As a result, I encourage you to test various calculations and entry and confirmation points to determine which best suites your trading style and risk tolerance. Thank-you for your continued contributions to the Journal, and I hope you find the above information helpful. - Spydertrader
2005-04-12, Tuesday - Update BLTI symbol change to BLTIE resulting from NASDAQ delisting. Biolase failed to file its annual report on form 10-K, and as such, finds itself in non-compliance with NASD Marketplace Rule 4310(c)(14). Biolase plans an appeal. Full story located at the following URL: http://biz.yahoo.com/e/050411/blti8-k.html IPXL symbol change to IPXLE resulting from NASDAQ delisting. Impax Labs failed to file its annual report on form 10-K, and as such, finds itself in non-compliance with NASD Marketplace Rule 4310(c)(14). Impax labs plans an appeal. Full story located at the following URL: http://biz.yahoo.com/e/050407/ipxl8-k.html As a result, I have deleted BLTI and IPXL from the Final Universe List pending the results of the appeals. I have also deleted ISSC, KEYW & ULBI for failing to maintain their ranks. As a result, the Final Universe List currently contains 34 stocks: BCSI CALM CMN COGT CUTR DCAI ELOS EXM EZPW FFIV FORD FRD GDP HANS JUPM LCBM MCRI MFLX MIPS MSB PARL PMTI SGTL SIGM SINA SNDA SPTN SYNA TASR TOPT TRGL UBET USG XXIA Our system failed to generate any signals today as actual volume for our Watch List Stocks failed to exceed calculated Dry Up Volume prior to 11:30 AM. - Spydertrader