Friday, September 05, 2008

Buying Sentiment Stalls Out: A Look at the Cumulative NYSE TICK

Here we see the Cumulative NYSE TICK from July 1st through Thursday. Recall that the NYSE TICK measures the number of NYSE stocks trading on upticks minus those trading on downticks. This gives us a relative sense for buying vs. selling pressure across the broad range of stocks. The Cumulative TICK adds the one-minute values for the NYSE TICK to a running total, like an advance-decline line. When the Cumulative TICK line is rising, it means that we're seeing more stocks trading on upticks than on downticks: net buying sentiment. When the line is falling, we're seeing more stocks trading on downticks than upticks, which indicates net selling sentiment.

After bottoming out with the general market in mid-July, we saw a dramatic and sustained rise in the NYSE TICK corresponding to a 100 point upward move in the S&P 500 emini futures. Since that time, however, the S&P has had difficulty surmounting the 1300 level and the TICK line similarly stalled out. We can see that the market's most recent attempt to surmount 1300 came at a lower level in the Cumulative TICK and has been followed by concerted selling pressure. That having been said, we're well off the July lows in the Cumulative TICK, and I'm watching this and other indicators for possible divergences on any test of the mid-July price lows.