I find the NYSE Tick indicator to be one of the most reliable weapons in my trading arsenal. The Tick is a simple measure of upticking vs downticking stocks on the NYSE. When used correctly it is very powerful.
Most people, when using Tick, simply apply it as an overbought, oversold indicator. The general idea is that anything over +1000 is overbought and anything under -1000 is said to be oversold. This however is an extremely broad application. In normal market conditions these numbers work well, but at certain times they will change. For example in a strongly downtrending market, we usually don't see oversold reactions until about -1200 Tick, and on the upside around +500 we start to see overbought reactions and bring in selling. The overbought/oversold application is valuable, but you must keep market conditions in mind.
A more consistent way to use Tick is by following intraday charts. I normally use a 2-minute and 5-minute chart. You can use this in much the same way you would follow a chart. Look for support, resistance and intraday trends. When Tick comes to an area of support or an area of resistance it is very helpful to time your entry accordingly. When we look at the trend our concern is which way is it going. Are we seeing higher highs and higher lows, lower lows and lower highs, or is it sideways, ranging broadly between areas of support and resistance. If it is uptrending we might be more aggressive with our positions on the long side of the market, and less aggressive in going after shorts, or visa versa in a downtrend. When the tick is sideways we would be in a scalping mindset, or setting on the sidelines waiting for a breakout in either direction as our confirmation to where the easiest money is to be found.
Brandon |
