IWM On The Sidelines - July 19, 2011

[adam ali]

Billy,

I'm still struggling a bit about how best to use the TICK indicator. For instance, yesterday the market was selling off hard in the morning but bottomed early afternoon and proceeded to gain strength in the last hour. Did the TICK give one an advance read on this? Should one look at this in a divergence sort of way (lower price on the index but less negative TICK number indicates a point where one might enter, etc.)?

Could you elaborate a bit on how you use it?

Thanks very much.

[Billy]

Billy,

I'm still struggling a bit about how best to use the TICK indicator. For instance, yesterday the market was selling off hard in the morning but bottomed early afternoon and proceeded to gain strength in the last hour. Did the TICK give one an advance read on this? Should one look at this in a divergence sort of way (lower price on the index but less negative TICK number indicates a point where one might enter, etc.)?

Could you elaborate a bit on how you use it?

Thanks very much.

Adam,
It is extremely simple. I use cumulative $TICK as a detector of buy and sell programs.
Here is a 10-day minute by minute chart with the half-day, full-day and 10 hours averages. These averages have been arbitrarily chosen after observing that they were reliable for trend-following.
When the cumulative TICK stays above the ½ day average, the buy programs are on.
When below, the sell programs are on. When there is a reversion to the average, there is a pause in the programs that ususally resume on the ½ day average or reverse (from buy to sell or from sell to buy). It closed yesterday right on the average, so look today if it falls back down (sell programs on) or crosses the average upward (buy programs on) after he open.
Don’t make it complicate when it is so nice and easy!
Billy

[adam ali]

Keep it simple - agreed. Thanks.

[manucastle]

Adam,
It is extremely simple. I use cumulative $TICK as a detector of buy and sell programs.
Here is a 10-day minute by minute chart with the half-day, full-day and 10 hours averages. These averages have been arbitrarily chosen after observing that they were reliable for trend-following.
When the cumulative TICK stays above the ½ day average, the buy programs are on.
When below, the sell programs are on. When there is a reversion to the average, there is a pause in the programs that ususally resume on the ½ day average or reverse (from buy to sell or from sell to buy). It closed yesterday right on the average, so look today if it falls back down (sell programs on) or crosses the average upward (buy programs on) after he open.
Don’t make it complicate when it is so nice and easy!
Billy

Attachment 9384

Hi Billy,

I understand from above that you use the cum tick above and below the 1/2 day average for the general condition of buying and selling programs. How do you use the full day and 10 hour averages along with this ?

Thanks in advance.

Trev

[Billy]

Hi Billy,

I understand from above that you use the cum tick above and below the 1/2 day average for the general condition of buying and selling programs. How do you use the full day and 10 hour averages along with this ?

Thanks in advance.

Trev

Trev,
The ½ day average is the most reliable intraday and overnight in the absence of significant gaps. When wider gaps do occur, the full day average becomes the most important after the open until the ½ day average holds again as S/R.
When the 10-hour average is broken, it is very often the confirmation that all programs have reversed course.
On the chart below, you can see that confirmation occurred around 1:45 PM on Tuesday after failing to do so at 11:00 AM.
You can also read the averages alignments like any other moving averages-based trend following system with the typical “bow-tie” pattern at inflection points. Just remember that gaps can distort the reading. In fact, Cumulative $TICK is behaving much like an EV chart that also omits gaps.
Billy

[manucastle]

Trev,
The ½ day average is the most reliable intraday and overnight in the absence of significant gaps. When wider gaps do occur, the full day average becomes the most important after the open until the ½ day average holds again as S/R.
When the 10-hour average is broken, it is very often the confirmation that all programs have reversed course.
On the chart below, you can see that confirmation occurred around 1:45 PM on Tuesday after failing to do so at 11:00 AM.
You can also read the averages alignments like any other moving averages-based trend following system with the typical “bow-tie” pattern at inflection points. Just remember that gaps can distort the reading. In fact, Cumulative $TICK is behaving much like an EV chart that also omits gaps.
Billy

Attachment 9427

Thanks very much for you prompt reply Billy.

Trev