Intraday Swing Trading with the TICK April 13

Apr 13, 2011: 2:22 PM CST

In keeping with the recent lessons with the TICK and trading the intraday markets, let’s take a broader perspective of the past few days to see specifically how clean TICK Divergences helped you trade “swings” or mini-reversals intraday in the SPY or S&P 500 index.

Here’s the broader multi-day chart:

Click for full-size image.

This is picking up – or expanding – where my prior post  “Trading and Forecasting with the TICK – Lesson April 11” ended.  Be sure to read that post for a better explanation of the concept of comparing TICK (divergences) with price.

We’re seeing the S&P 500 Index (which just as easily could be the SPY, @ES futures, or any leveraged or related ETF) overlaid with the NYSE TICK (number of stocks “ticking” up at a given moment minus those ‘ticking’ down).

Traders can use the TICK confirm moves in motion (new TICK highs + New Price Highs = Confirmation and thus expectation for price continuation) or disconfirm them via divergences (New Price Highs with lower relative TICK highs = non-confirmation and expectation for potential price reversal).

Of course, on the 5-min chart, reversals occur frequently and it takes quick reflexes or intraday trading experience, but as you can see from the multi-day perspective, these swings last for hours if not full days at a time once a reversal is confirmed via a price breakdown of a trendline (the easy signal to enter or take profits).

Starting on April 11th (where I showed a detailed description), price pushed up in the morning while TICK trailed lower – your classic divergence.  Price then broke the rising trendline at the 1,330 level, triggering a breakdonw/reversal ‘scalp’ (or swing – depending on your definition) trade.

This short-sale trade ended with new index price lows at the 1,310 level on a clean positive TICK divergence from the 11th to the 12th (Monday to Tuesday) as shown.

Price then broke the falling trendline at 1,312 triggering a “take profits” exit for your shorts and a potential “get long” trigger to play a pending reversal.

That trade ended this morning (the 13th) on the breakdown under 1,316 near 11:00am CST and triggered a new short-sale that ended just after I captured this chart mid-session with another positive TICK divergence and breakthrough of the falling trendline.

As I type this, the Index is back up to the 1,317 level.

So these give three clean examples of “Carry-over” TICK divergences that were confirmed – triggered – with price breakthroughs of respective price Trendlines (you can also see the trendlines I drew in TICK as well).

It’s not all that complicated, but does take practice and that’s what these examples are intended to show you.

As always, nothing’s perfect but I’ve found this simple strategy goes a long way in helping you conceptualize intraday ‘swings’ or little reversals as they occur in real time – giving you clean entries and risk-controlled stop-losses (beyond the most recent swing high or low once the trendline breakout occurs).

As I showed in the prior post, look back over the blog archives – including the following links – for more information on trading/forecasting intraday moves with the NYSE TICK index:

“Lesson in Trading SPY Intraday with Two Timeframes and Divergences.”

“Why You MUST Consider Volatility When Trading with the TICK”

“Research in Behavioral Changes in the TICK Over the Last 10 Years”

“How Market Internals Helped You Avoid March 1st Big Gap Trap”

“Lesson on Using TICK for Intraday Reversals (“History Repeating”)

“Comparing the TICK and S&P 500 Highs for 2010?

“Using Intraday TICK Signals to Forecast Reversals”

“When Divergences Really Matter:  SPX at 1,300?

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

6 Comments

6 Responses to “Intraday Swing Trading with the TICK April 13”

  1. Tprovan Says:

    Hi Corey
    I have noticed that the large volume bar at the close of the previous day gives good support and resistenace for the next day to use with the tick.
    And as your snapshort shows you get a new tick high new price high at 3 wave then abig pullbacl and new proce high no new tick high and the last thrust. Then the lower tick high just before the trend line break.Got in too late to sit thru pullback on sso today but should finish up move with no new tick? we will see.
    Learning lots GREAT STUFF THANKS COREY

  2. Tprovan Says:

    To clarify last post the price associated with the large volume bar gives good support or resistance the next day

  3. james Says:

    Cool stuff Corey. I'm a tick freak!

    But as you rightly point out, it takes some intraday trading experience to get these right consistently. I was screwing stuff up for quite a while, but am improving. Like the 4/12 reversal to the upside – notice the first lower low before the final low? I went long on that, a weakness of mine is jumping the gun on countertrend entries. Got stopped out, then re-entered on the next low and got a winner. So that second long entry can make up for the previous loss quite easily, but where you exit on that second long entry will be the final determinant of how well you do! Fun stuff.

  4. Tprovan Says:

    Hi Corey
    Today 14th looks like new high tick no new price high on 5 minutes tick chart. Therefore gap up or gap down will go down? Look to enter on same new high tick no new high price then wack a mole when it goes through the zero line. Some observations looking for comments. tkx

  5. Tprovan Says:

    Hi
    From the pivot high on april 6th the 4th had a new tick high without a new price high,15th completes divergence new price high without new tick high, looking for trend line break and resumption of downtrend,could be monday? thoughts tkx

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