Talking with another trader recently, I realized that I should say a bit more about the NYSE Tick Index (TradeStation symbol $Tick). One of his comments was, “the NYSE Tick Index is no good except when the NYSE is trading.” Duh!

Okay, the NYSE is no good for short term trading except when the NYSE is open for trading. Actually, for me, it is not really much good except between the hours of about 10:00 and 14:00. The ;first hour and a half of trading is needed to build the chart into a useful indicator and the last hour, for me at least, the indicator is not nearly as reliable as it is during the middle of the trading day.

As I stated in some time ago, this is a complicated indicator to use and it would take a small book to fully describe the use sufficiently. Generally, speaking, I use it as a proxy for the S&P since the bulk of the S&P is made up of NYSE stocks. I also use my Yellow Oscillator component of my RMI custom indicator to help indicate the likely near term direction of the $Tick. The Yellow oscillator is optimized to detect short term momentum changes and predict the extent of the coming move.

Like all indicators used in technical analysis, it is based on historical data, although in this case the time span of historical data is quite short. We use tick bars for this chart, but in all honestly, a one minute per bar chart is very close to the same as our 50 tick per bar chart for this indicator.

Generally, we consider the Yellow Oscillator to be a leading indicator, bullish when moving up above price and bearish when moving down below price. We also use the peaks and valleys to predict future extent of price excursions.

Figure 1 NYSE Tick Index

In the chart above, note that the Yellow Oscillator is below price and moving down. We expect that this move will go down to a value of about 700 for the Index value. We would consider only a short trade in this scenario.