Market internals
Lesson #1
The $TICK. It is a short term trading indicator that I use for the big boards. The number it shows represents the number of stocks ticking up minus the number of stocks ticking down on the NYSE. Even though the actual number measures listed stocks, it acts as an indicator for securities on all exchanges.
It is good to check the $TICK on both a 5 minute chart and on the Daily and note support and resistance areas.
If for example, the $TICK reads +332, that means 332 more stocks on the NYSE are ticking up, than ticking down. Any number over zero means the TICK is positive. If the TICK reads -587, it means 587 more stocks are ticking down than up, and that's a negative signal.
During a trading session, when the $TICK stays consistently in positive territory, stocks acting strong on the day generally keep their upward momentum. If the $TICK number screams up over 1000 you should become nervous as this reading tells you the market is in overbought territory and is due to pullback. The $TICK over +1000 is a great short term sell indicator.
On really negative market days, like today, watch for the $TICK to sink to -1000 or lower. That's a signal that things are about as bad as they can get. The market is in oversold territory here however and usually has nowhere to go but up short term. Today the $TICK hit a low of -1174.00 and it closed with a reading of -838.00 Still very oversold.
The $TICK doesn't always behave as expected. Here is one way though where I believe it will help you implicitly. If the $TICK is below 0 for the day...or in danger of falling below 0....do not attempt to scalp or daytrade. When the $TICK stays negative, many breakouts will tend to fail.
The $TICK can be a powerful indicator to simply add to your bag of tricks. Enjoy
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