Monday, August 03, 2009

NYSE TICK and Buying Sentiment: An Alternate View


The recent post took a look at today's Cumulative TICK, which takes each one-minute average TICK reading and creates a cumulative sum, like an advance-decline line.

Above we see a different view of TICK, based on a 10-minute moving average of TICK readings. Note how we detect underlying buying pressure based on how little time the moving average spends below the zero line.

In strong buying days, pullbacks of the short-term moving average of TICK toward that zero line offer potential buying points. In actual trend days to the upside, those pullbacks of the moving average will occur at successively higher price lows, often providing nice short-term entries.

As the chart above suggests, it is difficult to sell the market for anything more than a scalp when buying pressure is steady through the day. Trading in the direction of the TICK distribution generally puts the sentiment wind at your back.

For more on this topic, check out this post on TICK during uptrends and this basic explanation of TICK.
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