Cook Cumulative Tick (CCT)

The history of the Cook Cumulative Tick now spans four decades. The very early days Mark noticed that the TICK on the NYSE indicated corresponding buying or selling. The year was 1986 and a very strong rally pushed prices upward in the later part of the year and this was very conspicuously associated with high plus tick. The more the plus tick was, the quicker the prices moved with a wider swing. It was as if a light bulb went off in his observations telling him that a tight correlation could give some insight into the internals of the market. His early attempts at quantifying the tick to prices was like Thomas Edison developing the light bulb, much failure. There was a noticeable increase in TICK associated with price but he was unable to use a tight numerical association. Undaunted and three years of lab experience he finally found his eureka indicator. The CCT as it is abbreviated.

The first real venture and field trial was the Persian Gulf War during the fall of 1990 almost four full years since its discovery. He had compiled all the high minus tick associated with the crash of 1987 and compared the price movement with the oversold situation prompted. Therefore, when the Persian Gulf chaos created fear the numbers pointed to a three hundred-point rally on the Dow. To his sheer surprise, the 300 points came in literally hours not days. The magic indicator was like a stretched rubber band that propelled prices in a contrary manner much like an oversold overbought indicator does. The 1990-year saw him place money into the situation and some endeavors quadrupled in a short time of the first bullish eruption to the upside. He was elated, as his indicator finally was a burning light bulb. The highs on the plus and minus side corresponded historically to some notable highs and lows over the past two decades. The long-term capital demise in august of 1998 was the highest oversold reading ever. The millennium induced craze that Greenspan orchestrated in the first quarter of 2000 was the most overbought. The first marked a bottom that literally doubled to the upside while the second marked an overbought top that was more than halved.

The CCT represents a cumulative computation of buying and selling. There are generally just a few instances that trigger excessive swings in either direction. The first is isolated news items that artificially spark ignited moves in short durations. These are termed isolated instances and are very temporary. The second represents trend environments propagated by a changing news environment either to a bullish atmosphere or to a bearish atmosphere. Finally, a government induced environment whereby the Fed changes decisively its monetary policy. All of these environments create aberrations in the market that must be brought back to equilibrium. The pure theory is that the market always seeks to become neutral. This means that an equilibrium state is where the market is at comfort. Exaggerated moves in any direction distort the equilibrium and create pressures. The greater the pressure that is seeded builds energy that is utilized to offset the move. The CCT foretells movements but also the volatility associated with the movement.