Tuesday, May 26, 2009

A Quick Look at Strong Buying Pressure

I've talked with several traders who were trying to sell the market this morning, only to lose money. Here is where it's important to track the distribution of the NYSE TICK. You can see that, all day, the moving average of TICK (blue line) has stayed above the zero line (black). As I stressed in the intraday Twitter posts, we had no TICK readings below -600 all day into the early afternoon. What that tells you is that institutions are not actively executing sell programs, so that large numbers of shares are not downticking at the same time. Until that dynamic changes, it is difficult to sell such a strong market for more than a scalp trade.