Thursday, March 25, 2010

NYSE TICK as a Gauge of Intraday Swings

Here we see a four-hour moving average of NYSE TICK (pink line) plotted against SPY (blue line) from March 17th through today's session.

Such a moving average of TICK acts as a short-term overbought-oversold measure. It also highlights when stocks might be making new lows and new highs when selling and buying pressure are waning--nice indications of potential reversals.

1 comment:

TraderJay said...

I use Tick in a very elementary way.

Typically, I do pair trading in stocks that I believe to be highly correlated, for example Schwab vs Ameritrade vs Options Express, or a pair of REITs.

When a trade reaches my profit target or when one of the names gets to a support or resistance level that indicates an exit, I look to tick.

If tick is into extreme territory (absolute value is > 400, I close the opposite side first. So for example, if tick is minus 400 and heading down, I will close my long first and wait for the tick to bottom out before I close the oter it a "leg cheat"