Sunday, January 10, 2016

TICK NYSE Tick 1-Minute Chart

The TICK machine was buried in the bear camp late Friday as the week ended. The sentiment was over-the-top bearish. As the selling continued last week, more and more market participants began wringing their hands lamenting, "oh woe is me, there is no hope." Stocks were dropping like a stone on Friday afternoon. The baby was thrown out with the bath water. There was blood in the streets. Several traders jumped from windows, fortunately, the windows were on the first floor.

When a -1000 TICK prints intraday you immediately know stocks will rally because sentiment is too negative. Conversely, when the TICK machine hits +1000 you know stocks will immediately selloff due to excessive optimism and upside euphoria. During the last one-half hour of trading, the -1000 ticks were printing one after another then boom, a -1200 tick. That is off-the-charts bearishness which is too excessive. Thus, the stock market may want to feel some upside love instead of all that negativity from last week.

The TRIN Arms Index spikes to 2 so that is consistent where the bearishness becoming excessive. The TRIN was between 1 and 2 during the week reflecting the steady-eddy selling. This behavior crushed the bulls last week since the selling was orderly and simply continued day after day. The bulls needed a quick crescendo of negativity to reverse things but that did not arrive until the final minutes on Friday as shown by the TICK chart and other indicators discussed in this message.

The CPC and CPCE put/calls spiked higher consistent to where a near-term market bottom would occur. Thus, indicators such as TICK, TRIN, CPC and CPCE, and even throw in the elevated VIX, show excessive negativity and bearishness, so from a contrarian perspective, markets should place a near-term bottom and recover.

The SPX daily chart shows weak and bleak indicators so lower lows in price are desired after any bounce occurs. The SPX 2-hour chart shows positive divergence in play and should be universal for all chart indicators in about 1 to 4 hours trading time. Thus, mixing all of the above together and sprinkling some magic voodoo dust on it, the projection would be that the stock market places a bottom and begins a rally between the Monday opening bell and noon time, perhaps a little ways into Monday afternoon, and the rally may quickly launch price wildly higher but it may only be a one or two day rally event, since the daily chart will likely want price to come back down again. So a long play has potential for stocks but you must be a very nimble trader and the rally will need to show up tomorrow.

To shave off pennies in  your trading to your advantage, enter long positions or cover shorts when the TICK hits -1000 and sell longs or bring on shorts when the TICK hits +1000. The TICK is a vital tool for trading especially for day traders. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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