Thursday, March 09, 2006

NYSE TICK and Descriptive Statistics

I'll amplify on this tonight: Sometimes descriptive statistics alone are of value in trading. For example, as I write at approximately 10:30 AM CT, we have not yet had an NYSE TICK reading of +1000 or greater. Since the start of 2005 (N = 296), there have been 262 days that have seen such elevated readings and only 34 that have not. I'm willing to bet that we will have just such an elevated spike sometime today, and I'll look for the setup. Then I'll trade the instrument best positioned to take advantage of that spike, which--right now--looks like SMH, the very instrument highlighted in yesterday's entry. Not something I'd bet the farm on, but a thought going through the head right now...