The indicator on the lower subgraph plots the cumulative sum of the NYSE $TICK values. The horizontal lines on the indicator represent average values of the cumulative tick at 10:30, 12:00, 13:30, and 15:00 EST. There are separate averages for days with a positive closing cumulative tick, and days with a negative one. By comparing today’s value to the average lines at a given time you can get a sense of the strength of the day’s trend in relation to the historical average. Ideally, you would like to calculate the average value lines over a larger time period than 20 days and a smaller interval than 5 minutes. The best you can do with TOS is 20day 5min.

You can see that by noon on Friday cumulative $TICK had blasted through all the averages and actually ended the day at it’s highest level since 6/19. Also interesting are the big two red volume bars at the open. If you listened to @tradersaudio (or you were in the pit) on Friday you would have heard paper getting run over; selling and shorting like mad men into the melt-up. Obviously they got it wrong.

Studies created by thinkscritper.com