NYSE TICK Divergences Predict End-of-Day Selloff

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Technician's Corner

NYSE TICK Divergences Predict End-of-Day Selloff

 

 

One of the screens that we at Fibozachi continually monitor throughout the Cash session (09:30 - 16:00) is the NYSE TICK. 

The hackneyed cliche of "volume precedes price" is certainly true more often than not, however, it is far from foolproof.  We prefer to modify this tired cliche by saying that: "buying and selling pressure precedes price."

The snapshots below (from today's session) clearly illustrate how this critical relationship (between the TICK and price action itself) plays out on a daily basis. 

 

- Please click on any of the snapshots below to open a large, crystal-clear picture -

 

ESH10 (S&P 500 E-Mini) with TICK Highs & Lows Overlaid onto Price

 

mint Scalper 1 Minute

 

NYSE TICK 1-Minute

 

mint TICK 1 Minute

 

For more examples of how to effectively 'trade the TICK' and other practical nuances within advanced technical analysis ... please see our R-tickle from 12.3.09, It’s 3:27 pm … SELL !!!

Watching the market internals on a 1-minute basis can be extremely valuable to intra-day traders (especially those who scalp futures) as warning signs within these internals almost always lead actual price action on the ES (S&P 500 futures, current basis December, ESZ09) by just a full second or two. 

 

Please always remember that everything is contextual; a new TICK lod reading that registers with only a half-hour remaining in the session does not always imply that an end-of-day (eod) sell-off will occur …. many times it will indicate that an exhaustion of selling pressure has taken place and effectively mark the low - in actual price action - before a swift upwards push takes hold into the close.  

 

The new TICK lod reading of -889 that occurred today at 15:27 (3:27 EST) was much more likely to be a bearish kick-off signal because the ES had spent the majority of the cash session (09:30 - 16:00) in a narrow trading range, otherwise known as ‘sideways chop.’  When trend is purely neutral and the TICK has not registered any noteworthy reading for hours …. the first extreme reading that it registers usually signifies to technicians that an outsized price swing will soon follow.  Today’s bearish instance is a perfect exemplar of this practical nuance within technical analysis and just one of many which successful traders effectively employ on a daily basis.

 

p.s.  beware the Bearish Engulfing candlestick pattern on the daily S&P cash (INX)

 

Disclosure: during any given session, we may trade any of these instruments bi-directionally.  We are currently flat and merry at the time of publishing.

 

For similar technical takes, market calls and insights; please visit our new website, www.fibozachi.com.  There, you can view both our complete body of analytic work as well as detailed explanations of the unique design development and technical methodologies within the proprietary technical indicator packages that we use daily to perform a comprehensive technical analysis of stocks, options, ETFs, bonds, futures and FOREX across interval periods of time, tick and volume.