Tuesday, March 02, 2010

Midday Briefing for March 2nd: Watching Relative Strength

We can see how the S&P 500 (ES) futures (above) have been range bound, even as we've traded higher on the Russell 2000 and NASDAQ 100 Indexes. One tell regarding this relative performance has been the strength of NYSE TICK (which has been consistently positive) relative to the Cumulative Delta (click on chart and see row highlighted by blue arrow). Among the broad list of NYSE stocks, more issues have been trading on upticks than downticks. In the S&P 500 futures, however, volume has been relatively evenly distributed at the market offer and at the bid. When TICK is strong relative to Delta, it usually means that the small cap stocks are behaving stronger than the large caps; catching that relationship early can help you decide which index you want to trade.