What Is the Closing Tick?
The closing tick is the difference between the number of stocks that closed higher than their previous trade and the number that closed lower than their previous trade. That is, the stock market overall is reported to have closed "on the uptick" or "on the downtick."
This number is used by traders as a technical indicator denoting the strength or weakness of the broad market. A large number of upticks in stock prices at the close indicate market strength or bullishness. Negative closing ticks indicate bearishness.
The most widely watched closing tick is that of the New York Stock Exchange (NYSE). If, for instance, the closing tick on the NYSE was +300, a total of 300 more stocks were moving up than were moving down. If it is -300, then 300 more stocks were moving down in price than up.
- The closing tick is an indicator of the price direction of a single stock or the market as a whole.
- It measures the difference between the number of stocks that were moving up in price and the number moving lower.
- A market moving upwards at the close is "on the uptick;" one moving lower would be said to have closed "on the downtick."
Understanding the Closing Tick
The closing price of a stock on any given day is of greater significance to traders than its intra-day prices. It is seen as a stronger signal of which way demand for the stock is headed, at least for the following trading day.
By the same token, the closing tick is a more significant indicator of the current health of the market than its intra-day movements can offer. If the NYSE closing tick is positive, the market can be thought of as positive.
Many stocks today continue to trade in the after-hours markets. Technical traders generally ignore after-hours statistics as the trading volume and other factors make direct comparisons difficult.
Tick size refers to the minimum price movement of a trading instrument in a market. The smallest possible tick in price for any stock valued above $1 per share is one cent.
Reading the Tick
The closing tick for a single stock or for the wider market gives traders and individual investors a sense of the direction of the market on the following day and an indicator of how well their strategies worked the previous day.
Stocks that are ticking downwards near the end of the trading day are often referred to as selling at the close while stocks that are rising in price at the end of the day are known as buying at the close.
The smallest possible tick in a stock price is one penny on any stock that is valued at above $1 per share.
The Wall Street Journal publishes a Markets Diary: Closing Snapshots that is probably the best-known source of the stock tick for the day. This is a comprehensive overview of stock statistics, including closing ticks, issues traded, advances, declines, unchanged stocks, and total trading volume.