Page 231 - THE MARKET WHISPERER

THE MARKET WHISPERER 22 7

about to buy will also correct with the market trend. The market cannot
withstand a positive reading of 1000, so it is worth your waiting until the
stock reverses, together with the market, and perhaps buying it at a lower
price as it reverses. The same is true for the opposite direction: an extreme
negative reading usually indicates a reversal, and this correction will cause
the stock you are about to sell short to rise.

I frequently present this same exercise to my students, and almost all
of them miss the correct answer. They interpret the positive 1000 TICK
reading as indicating a strong market, and are interested in buying. Big
mistake! Now you can see how, while it is indeed a very strong reading,
it indicates that the market is nearing exhaustion and a correction can
be anticipated. Market support is important for your stock’s breakout,
and therefore while it is reversing, the chances of failure are even higher
than usual. Wait patiently for the reversal and buy cheaply. A stock price
may not always drop, but it is better to lessen the risks and increase the
percentages of success.

2. TICK trend
TICK in Five-Minute Candles

• When the market is showing an intraday downtrend, the TICK will often
move between negative readings of minus 1200 (enthusiasm over lows)
and positive readings of plus 800 (non-enthusiasm over reversals).