HISTORY

Tops in the stock market generally occur with readings of +600 or more. As a rule, the more the tick reading exceeds

+600 intraday, the stronger the top. Some of the highest intraday uptick readings for trading days in 1994 can be

seen in Figure 3. You can compare these tick readings and the price action of the S&P cash index by looking at

Figures 4 and 5

Near significant bottoms, such as the 1994 dates of March 2, April 4, June 24, October 5, November 22 and

December 8, the NYSE tick index readings equaled or exceeded -1,100 intraday (Figure 6). Therefore, when tick

readings exceed -1,100, a buying opportunity may be near. For example, leading up to the April 4th time frame - an

important market bottom - the extreme three-day cumulative average negative tick readings were as follows: On

March 30, a -1,450 tick was recorded; on March 31, a -1,460 tick was witnessed; and the reading for April 4 was a

-1,450 tick. The average downtick reading for those three days was -1,453, which was the highest three-day average

for 1994. You may recall April 4 marked the low of the year.

Extreme tick readings do not necessarily mark significant turning points. Sometimes they appear at the start of a

consolidation pattern instead of a top or a bottom. For example, in Figures 4 and 5, on February 4 and November 4,

-1,380 and -1,140 tick readings were recorded at 468 and 462.50 on the S&P cash index, respectively. February 4

and November 4 were temporary bottoms; the market went sideways for a couple weeks before breaking down to

new lows. Negative tick readings exceeding -1,100 did stop the decline, but the resulting condition was a short-term

bottom that evolved into a consolidation pattern. Thus, when an intraday downtick reading of -1,100 or more

appears, it may be wise to tighten your stops and watch to see if a bullish candlestick pattern develops.