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Using the NYSE TICK and TRIN Indicators

Presented by Brandon Frederickson

[18:03] <Brandon> Tonight I am going to discuss how to go about using the NYSE TICK and Trin indicators in your trading.
[18:03] <Brandon> As these are primarily intraday indicators, the best use for them is by daytraders and scalpers in general.
[18:04] <Brandon> In my own trading the TICK and Trin are probably the two most important indicators that I use to get a handle on the market.
[18:04] <Brandon> They give a very clear indication of the markets breadth and general sentiment.
[18:04] <Brandon> Generally they just let you see what is going on, what the flow is.
[18:05] <Brandon> I will start with the TICK
[18:05] <Brandon> on most platforms you can pull this indicator up with $TICK or $TICK-N
[18:06] <Brandon> I'm of the opinion that the TICK is one of the most reliable indicators available to an intraday trader.
[18:06] <Brandon> The TICK is a very simple indicator measuring the number of Nyse stocks currently trading on an uptick vs those trading on a downtick.
[18:07] <Brandon> An uptick occurs when the prior sale in a stock is below the price of the current sale.
[18:07] <Brandon> A downtick occurs when the the prior sale in a stock is higher then then current sale.
[18:07] <Brandon> There are several ways that I go about using the TICK.
[18:08] <Brandon> The most basic idea with it though is to get a good gauge of the overall market breadth and sentiment.
[18:08] <Brandon> It provides a very nice snapshop view of who is in control in the battle between the Bulls and the Bears.
[18:09] <Brandon> When I look at the TICK indicator, the first thing that I look at is the overall trend, that is to say is it uptrending or downtrending?
[18:10] <Brandon> When the TICK is uptrending then I assume the bulls are in control and my bias is long.
[18:10] <Brandon> (btw, I look at the TICK on a 5 minute line chart)
[18:10] <Brandon> When the overall trend in the TICK is down then I assume that that the bears are generally in control and my bias is generally to go short.
[18:11] <Brandon> You can also look at the TICK and get a general idea of if things are dull or hopping, heating up or cooling down.
[18:11] <Brandon> If you look at the TICK and find that its pretty much in a range between +300 and -300
[18:12] <Brandon> Then your basically dealing with a pretty flat, range bound dull market.
[18:12] <Brandon> The kind that should be giving you sore hands, but unfortunately for many traders leads to diminished bank accounts.
[18:12] <Brandon> Also its important to see which side of the zero line the TICK is mostly playing on.
[18:13] <Brandon> If when its staying above it and every time it comes down to zero there is a bounce, then even in a range bound situation there is likely some underlying strength.
[18:13] <Brandon> Reverse is also true.
[18:14] <Brandon> When you are dealing with a strong market you want to see that in general you are getting higher highs on surges in the TICK
[18:14] <Brandon> When you are dealing with a weak market then you want to see that in general you are getting lower highs on surges down in the TICK.
[18:14] <Brandon> This shows you that the momentum is continuing to build in the market
[18:14] <Brandon> and its being shown to you in the TICKs
[18:14] <Brandon> you can continue to be comfortable playing continuation patterns in the direction of the overall trend.
[18:15] <Brandon> When things start to slow down under the surface in the market, then you are likely to not see this
[18:15] <Brandon> meaning that as the TICKs rally, they will not continue to make a higher high
[18:15] <Brandon> even if overall they are still positive
[18:16] <Brandon> if they start to not be able to take out the last high on the surges
[18:16] <Brandon> then momentum is fading
[18:16] <Brandon> Very aggressive traders can look for short entries.
[18:16] <Brandon> But even if you do not do this, you should start to be very cautious of the continuation patterns (i.e. flags)
[18:16] <Brandon> Next when the market is making new highs or new lows
[18:17] <Brandon> you definitely want to see this is also the case with the TICK
[18:17] <Brandon> if its not, the same goes as above.
[18:17] <Brandon> It is a strong warning to you that overall momentum is fading in that direction, and you should be extra cautious of the trend.
[18:17] <Brandon> Another use of the TICK is to identify market extremes.
[18:18] <Brandon> As a generic blanket statement people always say +/- 1000 is extreme
[18:18] <Brandon> This is a very generic statement
[18:18] <Brandon> and leads to a lot of people getting hurt because people say well sell +1000 TICKs
[18:18] <Brandon> so people sell them short with out looking at anything else.
[18:19] <Brandon> the problem is that over bought markets often get more overbought
[18:19] <Brandon> and oversold becomes more oversold
[18:19] <Brandon> but even bigger then that is that 1000 does not always apply
[18:19] <Brandon> if you are dealing with an extremely strong bear market swing for example
[18:19] <Brandon> a +400 in the TICK (basically anything outside of neutral) can very easily be an overbought situation in the market
[18:20] <Brandon> while you may not become oversold until you get down to -1200/1300 area
[18:20] <Brandon> or if you are dealing with a very strong bull swing
[18:20] <Brandon> then you might not see overbought until between +1200/1300
[18:21] <Brandon> and TICK readings anything under -400 might be oversold
[18:21] <Brandon> so its important to always take into account the current market situation
[18:22] <Brandon> Finally I like to pay attention to the levels the TICK reaches in the first 20/30 minutes of the Day
[18:22] <Brandon> esp if there is a gap
[18:22] <Brandon> if we get a gap up, I treat a +500 or better tick reading as confirmation of this gap
[18:22] <Brandon> if we do not get over that +500 then I will short the weaker participating stocks
[18:23] <Brandon> and look for the first opportunity to short the indexes
[18:23] <Brandon> reverse this for the gaps down
[18:23] <Brandon> Finally I look at the daily range
[18:23] <Brandon> and just want to know what the high and low where (then see if they are taken out the next day)
[18:23] <Brandon> as well as the # on the range and if it is an NR7 or WR7
[18:24] <Brandon> This tells me if the market is coiled or expanded
[18:24] <Brandon> I am going to open the room up now for questions about this section.
[18:24] <Brandon> Then we will move on to the TRIN
[18:25] <Brandon> Room is open, go ahead with any questions you have.
[18:25] <Brandon> anyone?
[18:25] <makityrs> seems pretty cut and dried
[18:26] <Brandon> ok
[18:26] <dalau> sounds like 20 min min is the wait period to get a good read of TICKS
[18:26] <Brandon> seems as though I did an excellent job and there are none
[18:26] <_jaw> isn't it possible that with lower volume (like today), that the moves could be more volatile ? I think this affects the trin more though ?
[18:26] <Brandon> not so much because it just measures the last trade
[18:26] <Brandon> and things always trade
[18:26] <Brandon> it can have a very minor effect on the TRIN
[18:26] <_tung> Will you post the log in some web URL link???
[18:26] <Brandon> but not that much
[18:26] <Brandon> yes tung
[18:27] <Brandon> Now I will discuss the Nyse TRIN, also known as the Arms (after Dick Arms) Index.
[18:27] <Brandon> The formula for the TRIN is
[18:28] <Brandon> Advancing issues/Advancing Volume
[18:28] <Brandon> ----------------------------------------------------
[18:28] <Brandon> Declining issues/Declining volume.
[18:28] <Brandon> This equals TRIN
[18:28] <Brandon> The TRIN is another indicator that I find to be invaluable to me on an intraday basis.
[18:29] <Brandon> When I look at the I am primarily concerned with its overall trend.
[18:29] <Brandon> A rising Trin is bearish on a short term basis.
[18:29] <Brandon> In this situation risk will be higher for longs and I generally favor the short side of the market.
[18:30] <Brandon> A declining Trin is short term bullish. Risk will be higher for shorts, and in this situation I generally favor the long trades.
[18:31] <Brandon> The Nyse Trin also gives you a good handle on the markets overall ""health""
[18:31] <Brandon> A few general points.
[18:31] <Brandon> A Trin reading below 1.0 is ""healthy"" i.e. the bias is up.
[18:31] <Brandon> A Trin reading above 1.0 is ""sickly"" and the bias is down.
[18:32] <Brandon> In general a range between 0.75 and 1.25 is flat or neutral.
[18:32] <Brandon> The Extreme points to watch in the Trin are around 0.30 which shows euphoric buying and a possible top.
[18:33] <Brandon> And then readings above 2.0 which suggests excessive doom and gloom and the possibility of a short term bottom.
[18:33] <Brandon> I have found that the extremes on the TRIN can get pretty extreme though
[18:33] <Brandon> and this is not the best way to use it
[18:33] <Brandon> I have seen TRIN readings of 9.0
[18:33] <Brandon> and I've seen them of .16
[18:33] <Brandon> and the market kept going
[18:34] <Brandon> so the most important thing with the TRIN in my opinion is the overall trend
[18:34] <Brandon> as you go into the afternoon you want to pay attention to the level on the TRIN
[18:34] <Brandon> if the TRIN has spent all day trading under .50
[18:34] <Brandon> in most cases you will see extremely strong buying into the close
[18:34] <Brandon> probably 4 out of 5 times
[18:34] <Brandon> there is no real corresponding number on the high Trin though.
[18:35] <Brandon> so, this pretty much wraps up the Trin
[18:35] <Brandon> I will go ahead and again open up the room for any discussion you may have.
[18:35] <Brandon> #Class is unmoderated.
[18:35] <shoeless> Just a note for beginners
[18:35] <esjim> do you use trin q or trin n?
[18:35] <Brandon> in all cases I use the NYSE indicators
[18:36] <shoeless> I have found that a little typed not on the monitor with these values and what they mean is helpful
[18:36] <_jaw> do you also look at the Naz tick and trin / and why the line chart over candles ? thanx... nice lesson
[18:36] <shoeless> not=note
[18:36] <Brandon> most of the programs are attached to the NYSE
[18:36] <Brandon> and that has an extremely important influence on the market
[18:36] <shoeless> but don't get hung up on the actual values watch the trend as B said
[18:36] <Brandon> I use the line chart because sometimes the TICK and TRIN can both get very sloppy
[18:36] <_rswarrick> where do we find trin?
[18:36] <Brandon> so there will be ""tails"" on a regular chart that will distort the reading
[18:36] <Brandon> the line charts give a much better feel for the trend
[18:37] <Brandon> the intraday for the Trin is $Trin-n or $Trin depending on your platform
[18:37] <Brandon> For realtick it is $TRIN-N
[18:37] <_rswarrick> tks
[18:37] <_rswarrick> if you are using tradestation?
[18:38] <Brandon> should be $trin
[18:38] <shoeless> B you use 5 min on the TRIN as well correct?
[18:38] <Brandon> yes
[18:38] <django> Do you look at previous days reading in TRIN and TICK for relative trend
[18:39] <_jaw> in those rare instances when the market is divergent between the naz and NY would you still give the same weight to market direction for both
[18:39] <Brandon> yes
[18:39] <Brandon> but in those instances I tend to just stand aside and not be trading :)
[18:39] <_jaw> good advice / thanks
[18:41] <shoeless> So B you mentioned if TRIN is all day under .5 we'll most times see buying toward close
[18:41] <Brandon> most of the time
[18:41] <shoeless> Is there an alternative value on the down side
[18:41] <Brandon> not sometimes
[18:41] <Brandon> nope
[18:41] <shoeless> I think you already said no
[18:41] <woodman> how do you sort out divergences between tick and trin????
[18:41] <shoeless> just wanted to clarify ty
[18:41] <Brandon> I generally go with the TRIN
[18:43] <shoeless> Thanks B nice class I have to head out
[18:43] <Brandon> nite
[18:43] <woodman> wow, well said and to the point, thanks for the great notes
[18:43] <Brandon> thanks woodman
[18:44] <dana> great class, I will start looking for these things tomorrow. good nite.
[18:47] <Brandon> good night everyone
[18:47] <Brandon> I will see you all in the morning
[18:47] <esjim> tks B nice class
[18:47] <ralph> thanks B

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