Commentary on the last hour on Tu, Oct 4

[Billy]

$TICK related Q (Billy?):

I noted that cum $TICK did not take-off during the last 45 min on Tu. Paul Duncan noted this in his comments as well, but did note the Tradestation measures of the various index ticks (see his post for what I am talking about) did show a nice rise, i.e. strong sloping during this period. I don't use Tradestation, so I didn't see this, I only saw the relatively benign cum $TICK - Billy, what is your take on what was happening here?

Can't wait for the real-time stuff!

Have a great weekend everyone,

Shawn

Shawn,
First, let me remind everyone that cum TICK and its moving averages are still discretionary tools that are not included in the robot’s decision-making process. They are helpful to read what the dominant programs are doing and for leverage and position-sizing.
You are right that the huge price reversal on Tuesday’s final hour was not confirmed by cum TICK which closed just below the declining ½ day average. The TICK gives you the number of stocks ticking up/down each minute, but tells you nothing about the amplitude of the price changes behind each stock. A TICK reading of +800 can be for 800 stocks moving up +0.01% or + 10%! Therefore my tentative understanding of what happened is that the big move came with much less participating stocks than usual (cum TICK divergence) but these stocks had exceptional high percentage price changes. With hindsight, we can see that the leaders of that big move were mostly junk stocks (solar energy, coal,…) that had been battered down for months and at new 52-week lows. Some short-covering targets and algorithms may have triggered for these group of stocks only, hence the limited TICK impact in spite of the frantic price advance. But this classic and typical Junk-Off-The-Bottom bounce was followed by 2 days of relentless broad buy programs until they reversed Friday mid-morning.
Billy