Charts and Commentary
Today is a tip day on investing ...
The TICK is an indicator that measures the NYA Index (New York Stock Exchange) and provides an internal statistic of the stock market.
The TICK summarizes the number of stocks that are increasing in price versus the number of stocks that are decreasing in price from the previous price quote.
Some interpret it as buying and selling, but that is not entirely accurate.
An up-ticking stock is one where the most recent change in price was positive; a down-ticking stock is one where the most recent change was negative.
The Tick is calculated by subtracting the number of down-ticking stocks from the number of up-ticking stocks. For example, a tick reading of +500 means there are 500 more up-ticking stocks than down-ticking stocks. The TICK is recalculated continuously throughout the day. Normal tick levels are between +500 and -500; tick readings of plus or minus 1000 are generally considered extreme and often represent short term overbought and oversold conditions. (It is often used by day traders who look for extreme tick readings to determine these short term overbought and oversold conditions.)
Application of TICK data in the market ...
Below is a 20 minute chart over an 8 day period for the TICK and the SPY (S&P 500 ETF). I plotted Exponential Moving Averages of 6, 10, 15, 30, 60, and 89.
With these moving averages, you can see when the TICK is in an up trend by moving sharply above or below the 60 and 89 EMAs.
Look at the movement and trending of the TICK and then focus your eyes below to the corresponding SPY movement. When the TICK is above zero, it is positive and when below zero, it is negative.
This is a useful tool for day traders, and it is also a useful tool for longer term traders who simply want to get the best "buy in" price levels. There are other indicators and settings I use along with this to know what to do when the TICK is trending sideways. If you don't use the TICK, maybe this is something you might want to explore and learn more about.
The reason the TICK is so useful, is that it measures what is happening on the NYA Index where the majority of the Institutional trades are made, along with "program" trades.
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