Short-term Outlook (1-5 Days):  25% Bearish  Since July 15, 1083 SPX

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Equity Indicators - Updates and Extremes

NYSE  TICK

The TICK indicator is simply the difference between the number of stocks traded on an exchange, say the NYSE, that last traded on an uptick minus those that last traded on a downtick.

So if the TICK is at +1500, that would mean that 2000 stocks last traded higher than their previous trade, while 500 stocks traded lower (2000 - 500 = 1500).

In practice, with about 3200 stocks traded on the NYSE on any given day, we rarely see the TICK exceed +/- 1400 or so.  The TICK is one of those indicators that can vary wildly depending on your quote vendor - for this discussion, I am using Bloomberg data back to 1989.

Yesterday, we saw something quite remarkable.  During the afternoon, we got a trifecta of ostensibly good news - BP said no more oil was flow into the Gulf, a source denied that Apple was going to recall the iPhone 4, and the SEC announced a press conference for later in the afternoon, which traders immediately (and correctly) assumed was a Goldman Sachs settlement.

All of the news hit at around the same time, and buyer orders rushed in all at once, as the TICK hit +1645.  That was a new all-time high, a 21-year record.

The table below shows the 20 days with the highest intraday TICK reading.  Notably, the next day was positive only 5 times, with only one of those days showing a gain greater than +0.5%.  So it seems that the all-in rush served to mark some kind of temporary buying exhaustion.

The table is ordered so that the highest TICK readings in history are at the top.

Of course, over the years the number of issues traded on the NYSE has changed, so a +1500 TICK today doesn't mean the same as it would have in 1990.

But if we normalize the TICK for the number of issues traded, yesterday's extreme still stands out as the all-time greatest, with a net of more than 53% of all issues trading on an uptick.

There were two other dates that saw more than 50% trade on an uptick, 1/2/90 and 6/11/10.  The former top-ticked a major rally, and the S&P slid nearly 9% over the next month.  The latter instance, occurring earlier this month, led to a couple of more days of rallying before the S&P essentially topped out.

From 2002 onward, the TICK has had a fairly steady trading range, with +/- 1500 marking the upper and lower limits for all practical purposed.  Prior to 2002, there were only 3 days when the TICK was greater than 45% of all issues, 1/2/90, 5/31/91 and 1/3/01.

We already discussed the first one.  The one in May '91 happened to also top-tick a major market rally, and the S&P lost about 5% during the next month.  In '01, stocks fell hard for the next 3 days, then meagerly scrambled higher before rolling over again.

The moving averages of the closing TICK level that we watch are not currently at an extreme, and the table above doesn't show any particularly bearish edge after a few days, so I'm not reading much into yesterday's record other than a likely short-term buying exhaustion.

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