Tuesday, September 22, 2009

NYSE TICK, Non-Confirmations, and Market Reversals

Early morning reversals can be particular difficult for traders. Here we see a pullback in the ES futures (top chart, first blue arrow), followed by a bounce and a second pullback (second blue arrow). The second pullback saw new lows in the NQ futures, but not many of the S&P 500 sectors, including technology, healthcare, financial, and energy. Moreover, the NYSE TICK held at higher lows on the second pullback (bottom chart, first and second arrows) and the TICK never got to the significant -800 level of selling pressure. The non-confirmations and modest level of TICK suggested a lack of follow through to the downside, which was a useful tell for short-term traders.