Highest NYSE TICK in 21 Years Today and Overbought and Oversold Indicators

Today at the open we saw the highest NYSE TICK reading in 21 years. The value was +1994. This was the second highest reading in 25 years of historical data in Tradestation. The highest reading was +2,603 on January 3, 2001, the day Alan Greenspan, the Federal Reserve chairman at the time, surprised the market with an interest rate cut.

The S&P instantly rallied about 70 points within 20 minutes during a Chicago lunch break. Two days later the market returned to the same levels before the surprise rate cut.

Last Tuesday, we had the lowest NYSE TICK reading in the afternoon session we have seen since January 26, 2022 at the -1500 level. Then on Thursday morning we saw an NYSE TICK reading at the -1800 levels. The market's reaction was oversold, followed by a massive rally.

On Friday, the opening NYSE TICK reading was in the +1200 range followed by +1994 today. The market was overbought but the immediate reaction was a strong move higher at the open. We may see the market rollover later today and in the next couple of days if extreme TICK readings indicate overbought and oversold levels even if the immediate response to both overbought and oversold is to buy, based on the bullish bias in the market.

Additionally, the range of the NYSE TICK for this month is higher than it has ever been with high reading of 1994 and a low reading of -1997. This exceed all previous months in the last 25 years by more than 200 points.

It's a difficult scenario to test since these extremes don't happen enough to create many trades on a backtest.

The NYSE TICK is one of my favorite market internals and over the years we see this indicator diverge to higher highs and lower lows as we move forward in time and to higher index levels.

At the turn of the millennium, on January 3, 2001, when the Federal Reserve issued a surprise rate cut, the precedent for the beginning of an unhealthy relationship between the Federal Reserve and stock market investors was established. The entitlement and expectation of easy money continues to this day.

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