NYSE Tick

For Day traders and Swing traders, the NYSE Tick offers some extra insight to time their buys and sells. TICK indicator is available for NYSE, NASDAQ and AMEX exchanges. However, the popular one, $TICK, is for NYSE exchange. TICK measures the number of stocks that are increasing in price versus those that are decreasing in price from the previous price quote.

$TICK = Number of stocks with Upticks - Number of stocks with down ticks

If there are 500 stocks whose last trade is an up tick and 300 stocks whose last trade is a down tick, the Tick data show then a value of +200.

Though not necessary, Uptick generally occurs when there are more buyers (that is, buying occurs at the Ask price). When the order comes in, the market maker matches up the order against all the sell orders he has. Once he finds good match, he fills the order for both sides of the trade. Of course he takes his profit from either side of the trade. Depending on the number of orders in sell and buy direction, the price of the stock will move either down or up respectively. The point where $TICK comes into picture is when you are trying to determine if there are more traders who are buying at the Ask Price as opposed to the number of traders who are selling at the bid price. When we consider this equation for all of the stocks trading in NYSE exchange, we get the NYSE tick.

Here is a detailed explanation of NYSE Tick and how to assess Intraday trading sentiment from Dr.Steenbarger.

How to use $TICK?

1. Generally the range of $TICK is between +1000 to -1000. When $tick exceeds +500, it is considered bullish and bearish when it falls below -500. However when $tick reaches +1000 or -800, it is considered extreme case and chances are that the index will reverse the course.

2. Divergences between $TICK and the S&P500 price action can indicate potential buy/sell indicator.

3. Higher lows (& higher highs) in $TICK can indicate long positions and similarly, lower lows in $TICK (& lower highs) can indicate short positions for S&P 500.

$TICK offers an invaluable insight into what traders are doing and how aggressive have they been. It indicates if the traders action of buying at the ask or selling at the bid betraying that trend in the Index?

-Nidhi

You can find more analysis of NYSE tick here.