Here’s another way to detect a whiplash zone (click chart to enlarge):
Note: If your trading software doesn’t let you make a chart like this, you need a new broker. Tracking the TICK can dramatically improve your day-trading win ratio. Techniques like Tony’s are the real deal.
The top panel shows the NYSE TICK (black bars) at one-minute intervals. The purple line is a 5-minute moving average. Notice that the TICK’s moving average went to sleep inside of the red circle. Normally, the TICK bounces around like a Mexican jumping bean, so when it goes flat something is up.
The lower panel is SPY (blue bars). Notice that inside the corresponding red circle, it went into a whiplash phase. So, when you see the TICK go to sleep, you have a nice whiplash warning.
Today, the market was worried about the ten-year treasury note auction at 1pm. So, that was the cause of the whiplash. The best thing to do is wait for prices to break out of their whiplash range before taking a position.
In fact, inside of a whiplash zone, all of your day-trading skills will be turned against you, and the market will hoist you on your own petard. However, if you can dodge it, relax, and keep alert for the eventual breakout, you will be rewarded with a nice move.
Also, on the chart above, notice how the TICK’s moving average made a series of higher lows as SPY was falling between 1:00-2:15pm. That was a hint SPY might attempt a reversal.
Matt
Thanks for posting this you have pushed my button. I have been PO’d about SD not having TICK for sometime now. I just discovered that TOS is being bought by TDA. I think I will try the TOS just to get TICK if nothing else. TOS will likely replace SD anyway.
George my reply to your last question is on the trading post.
String
Dang Matt, you killed a longer reply… So what did I wrote? I so far have not found a way of overlaying dax and futures so I do it visually. When there is a disconnect, eg spx moving up or down and dax not or not so much following usually these moves are overdone. Like the fall today. Most often true for these last minutes frenzies. I agree with your assumption the ah markets are dominated by smart money.
Stringm, I’ve been following your discussion with George. As George is no machine (afaik) his system cannot be automated with certainty. I’d suggest to try to identify valid set-ups and throw all other stuff out. Otherwise you will get stopped out or have bad entries working against you. The scripting languages of the trading systems limit you to hard coded barriers, so you have to be less precise in your rules.
Yerk,
Are you saying that if I switch off comments for a post while you are typing a comment, you lose the comment? If so, I didn’t know that was happening. I turn off comments on the last post when I post something new to give the spam bots fewer targets. But if it is a problem I can delay turning off comments for the previous post for a while.
Matt
String,
Yes, internal indicators like the TICK are the market beast itself. You can’t do the Vulcan Mind Meld with the market beast if you can’t put your hands on it, right?
Matt
Matt
Yes the Vulcan Mind Meld is what I am after. You zap’d my long post to George also, but I reposted it and it seems to be there.
Yerk, see my last post to George. We seem to be on the same train.
String
George
I am not sure. I really am not trust worthy enough to set up a trade trigger and go vacuum. The problem is coding what one sees on the chart into a strategy. A teenie tiny bit below the zero line is kinda hard to code. You make decisions in real time on what you see, and the ingrained patterns you have developed. Coding that flexibilty is a trick. I am working on quantifying that teenie tiny thing. I have had this dilemma myself.
Everything that can be done as an alert or trade trigger can be done as a scan. I have 3 setups right now. I call them my hair lip strategies. If they pop up in my scan window, I take the trade, and I don’t care if it hair lips the Pope. That is why I am always quizing you so I can add another strategy to the hair lip list. That was fun today talking about the SSO trade as it happened. Thanks for the input.
String
I reposted it since there was confusion.
my only question is why are your lines at 400 and some other people’s at 600 or it doesn’t matter?
K,
Actually, don’t pay attention to those lines. I copied that chart from one of my other TICK charts where I use longer-term MAs. But what I do is, whatever moving average that I’m using, I fit the lines to the historic extremes of the MA. That gives me overbought/oversold extremes for the timeframe I’m looking at. The TICK is pretty reliably mean-reverting, so when you get an extreme, the market will usually move in the other direction a bit. To set your lines, just scroll your chart back and find the peaks and valleys and put your lines at those levels.
Matt
thanks Matt, I had the 400 and 600 set up as a buffer zone
Stringm,
Bad t’storms, had to shut down for a couple of hours.
Creating hair lip strategies is a good idea. I have a book full of them. Agree, it’s hard to program what needs to be done when the tools don’t accommodate.
BTW, What is the interval “Tick” in SD? there’s nothing there right now, is it the same tick Matt is discussing?
I’ll be on the road Friday and Monday. During my trip I will see if there is a simplified way to do what I’m doing that can be programmed.
Did you get a chance to program 9/36/15 EOD?
also I have started using that inside bar technique!
hearing rumors of gun control… might not happen but SWHC might have a nice upside as people go hog guns…
K,
I have the Ease of Movement indicator on my main chart window now. It works extremely well on 1-minute charts.
Matt
hmm everyone is on the tick today
http://danericselliottwaves.blogspot.com/2009/06/daily-tick-chart.html
George
Refresh my memory on 9/36/15 EOD.
The only thing I know of in SD that involves Tick is the Tick count for an individual stock. Not much use since you can see that on a chart. The power of the NYSE TICK Matt is referring to is the universe of stocks. If the whole market trades on a down tick at the same time that has implications.
We are having T’storms here as well.
Be careful in your travels. Remember there are folks that prey on us old folks. I have not carried my money and stuff in a wallet for a long time. I keep it in my front pocket. Had a friend traveling and was at a urinal. Someone pick pocketed him at the urinal. The insuing battle is a long story, just remember it pays to be prepared, and take care.
String
K/Matt
Talk to me Ease of Movement. I must have missed that thread. Does it have anything to do with Metamucil ?
String
K,
Yes, those “TICK barfs” are a good thing to watch out for too.
Matt
K
Gun control can’t increase demand enough to strip supply. There are plenty of unregistered guns. I have a few to sell. Gun control is a myth.
String
Stringm,
String,
It’s an indicator. Hopefully SD has it for you:
http://www.investopedia.com/terms/e/easeofmovement.asp
Matt
String,
How much you selling one for? let’s turn Mattgic blog into a gun shop. $150? LOL
Stringm,
9/36/15 (Matt’s “lingo” – numeric acronym) is a cross of the 9MA and 36MA to the upside, exit is end of day or a cross of 9MA and 36MA to the downside on a 15min chart.
I tried to program it but I’m doing something wrong. This is purely mechanical with losses and winners and I’m showing some months as 50% gain on SRS. That can’t be right.
This uses no filters. I believe a filter would be a good enhancement, like ensuring the 60min stochastic or MACD is turning also.
But with using pairs, this could be flipped from one stock then the other like SSO/SDS and not have to worry about anything but a straight mechanical system.