Here is my chart of SPY vs. Cumulative NYSE TICK as of the time I received an email from a reader/trader opining that stocks were "topping out". It was ironic that he sent the email at that time, because I had just committed to the long side on a trade.
To be sure, if you just look at price (blue line), you could make the case for a topping market. You might even see a head-and-shoulders pattern in the day's action.
Of course, you could probably see similar formations in the passing clouds...
What was important was that buyers were in control during the session to that point. We know that because more stocks were upticking over time than downticking; stated otherwise, we were seeing more lifting of offers than hitting of bids across the broad NYSE universe.
By cumulating NYSE TICK values (see earlier post for the formula), we can see the trend of intraday sentiment. That led me to expect a break to day highs and test of the bull highs. Many times, TICK will lead price, as price follows sentiment. More on that shortly.
.
Posts
4 comments:
"Of course, you could probably see similar formations in the passing clouds..."
LOL
Well, SPY did top 1 hour later and only 0.3 point above, so I guess his observation wasn't so far off.
It's the time frame that matters.
Where can I access real time NYSE daily cumulative tick data. Scottrade didn't have that data?
Long term resistence line from failure of SPY in Oct. 08; April 09 show 111 as major resistence. Failure at 111 likely means a decline to 107.3 to fill a gap within a week.
"of course, you could probably see similar formations in the passing clouds"
This seems peculiar coming from you given your recent post about the value of identifying and using patterns, both implicit and explicit, in trading.
You've, also, wrote that most of your holding periods for trades are less then 1 hour.
Note, I don't have any feeling one way or another what market will do until I predict it.
Anyone can track my progress at http://predictor.collective2.com.
Predictions are available for now on the discussion board under "Market Update". They are designed to be able to be tested quantitatively/objectively.
PS: Thanks again for great blog.
Post a Comment