ES Journal Archive (2011)

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TICK extremes tell the tale when a large auto program is done executing a basket order. The rest of the time is basically random.

At key levels it is useful. Just see it as what it is and not what you want to make it.
 
Thank you for this post, gkramer. I like your thought process when analyzing the market. Right down my alley :)

I have been watching the other indices, but not with permanent screen place, but I will implement that ASAP.

When you say that there was strong buying in a Dow component/sector, is that your way of reasoning because price broke out or do you actually watch internals? And is it a 2-minute chart you use for day trading?

Regarding what you said about indicators, I very much agree. That`s the reason I don`t use them in the first place. They might have value in a mechanical trading system, but not for me as a discretionary trader.

The reason I decided to implement TICK and sectors in the first place (I got the idea from Brett Steenbarger btw), is because they do add something as opposed to price-based indicators and I believe they make a lot of sense, especially since they are calculated in real time.

Yesterday was only one trading day and two losing trades, not enough to draw any conclusions. In truth, I`m not a consistent trader yet and still learning, but I have at times displayed good understanding of the market and I do believe the TICK and sectors have helped me. If I trade poorly, it might have other reasons as well, me mis-interpretating the indicators among many.

A few examples of when TICK helped me this week:

Tuesday 1st February: TICK persistently positive for the whole day, with no readings below -275. A massive display of strength. This gave me confidence to enter long on a pullback, in anticipation of a test of the daily highs. That we did.

Wednesday 2nd February: Price was in a trading range roughly 1,25 points from the daily highs. At that point, I actually went long on the top of that range anticipating a test of the high. Shortly after entering that trade, I noticed that we were making the highest TICK readings for the day (much higher than at the highs earlier in the day) and that divergence made me nervous. My reasoning was that since the highest TICK readings for the day could not push us to the daily highs being that close, we would reject the top of the range and test the bottom of the range. I had a tight stop at 1-points and got stopped out of my long. Now, I should have had confidence in entering a short immediately, but I wanted confirmation. That happened all too fast on significant downside momentum, but I managed to get a fill for a 1,25 point profit (that I did not take due to poor trade management, but that`s another problem).

Thursday 3rd February: I was entertaining the idea of a short on what I thought was a retracement, but I observed big buying tails at lower levels and also an upwards sloping TICK, both a signal of strength (or at least lack of weakness). This prevented me from entering short based on PA alone. Unfortunately, I did not enter a long at this point and hesitated later on.

Nothing works all of the time though and a skilled PA reader would probably not need the added information from the TICK. Also, if being guided by higher time frames, it is definitely less important.

That said, I am considering giving those two less space and weight, but I just wanted to say why I think they might make sense.

Best regards,

LF
Quote from gkramer:

Price price price. Acceptance. Rejection. Momentum.S/R. Trendlines. There are some excellent thread in here and other trading sites that discuss this.

LF: Indicators are lagging. They are calculated by PAST price. They tell you what price did, not what price is going to do.

How much $ has the TICK and your sector charts netted you? I'd venture to say that have cost you. A lot. Time. $ indecision. Bad info.

The S&P and the DOW and the Nazzie are what I watch. Not crude. There's little correlation. Not the 6E. Not the $

Pull up the 3 indices on a 2 min for yesterday. At the LOD, whaT do you notice about the Naz vs the SnP and Dow? The Naz bottomed long before the other two = strong buying in tech at that price area. A rising tide floats all boats. My first thought was that tech was going to lead us higher for the rest of the morning session = strongest momemtum in tech. The market then consolidated, then coiled/compressed like a spring, especially the Naz. It made higher low after higher low = strong BUYing. It finally broke out then pulled back slightly, and I pounced on the NQ (a carpenter has more tools than just a hammer). It blasted up well ahead of the other ndices, confirming my theory. I rode it up until it lost momo and consolidated, then TOOK PROFITS.

Then the market consolidated/coiled, but the Naz got the flu = few, if any, buyers at that level for the pm session. That's fine. I also have a saw, and a drill. But there were no signs of sellers, meaning there were no spikes down, no momo to the downside, no lower lows, the most recent support was still intact. We were just drifting down, watching some profit takers. So I'm still looking long, right? Why not? Strong rejection at the LOD. Buy programs clearly doing their thing. We broke out to the upside, and we're at the HOD. We might go sideways for the rest of the day, but I'll do whatever Mr Market tells me to do.

My buddy Naz was sick, so I look to see who to play with next. Lo and behold, strong buying in a Dow component/sector causes the Dow to breakout and lead us up. I don't trade the YM, so I grab some ES but keep an eye on the DOW for strength and momo. Looking good so far. My 15 says the buying won't stop until they shut off the lights, but I don't get greedy and take profits at the top of the channel and grab a brewski cuz it's five o clock somewhere and I'm happy with the day.
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I don't watch internals. I don't watch components. I simply saw that tech had sputtered and the Dow was now leading us up, which means a component of the Dow was being bought up, and that will usually bring the sector up in a "guilty by association" fashion.

I use a 2 and a 5 min, and the 15 is my anchor. I also have a 1 hour for overall trend and to watch for pullbacks balancing at swing highs/lows. These are very powerful moves.

Dump the TICK. You can see the same thing in the height of candles. And unless you trade a sector, don't watch them. They can be deep in the red at the open and turn green long after a move has taken place.

I will say that I do have an XLF chart to watch for strong momentum in either direction. The other sectors are useless for us tradeing the index futures.

Clear your charts and mind and you will prevail.
 
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