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Strategies & Market Trends : News Links and Chart Links
SPXL 213.39-5.0%Nov 13 4:00 PM EST
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To: Les H who wrote (1635)3/18/2002 10:28:38 PM
From: Les H  Read Replies (3) of 29596
 
Follow-up on tick indicator

stockcharts.com[m,a]dahlyyay[pc5][vc60]&pref=G

NYSE Up&Down Ratio (TICK)

What is it:

The TICK Index is the difference between the number of issues (or stocks) trading with the last trade higher (an uptick) form the previous price and issues (or stocks) trading with the last trade lower (a downtick) for the previous price. The TICK Index is useful in identifying turning points in the market when tick readings are at an extreme level.

For that purpose we use a 5-day moving average on the daily TICK Index data to smooth the movements. We learned that the plain TICK indicator is way to fast and not reliable enough for trading signals. A 5-day moving average instead works very fine in every market condition.

How a trading signal is generated:

A reading below –300 is considered as a Buy signal, a reading between –300 and +600 is indicating a neutral market and a reading above 600 is considered as a Sell signal.

This TICK Index Indicator is very reliable since it does only give signals at very extreme market movements. When a signal is generated, the market is often in a very oversold or overbought status and is due for a technical reaction which generates fast profits for traders:
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