In the old days, avid investors went to brokerage houses and sat in boardrooms. They watched the ticker tape and kibitzed with friends. Today, many investors can do the same thing, whether it be at home, at the mall or even at an airport lounge.

The ticker tape is broadcast on eSignal, television and the Internet. To most, watching the ticker tape consists of just eyeing the price of a favorite stock scrolling by on the screen. Is the price up or down? That's about all most people see.

But, there is a lot more.
An investor can use the ticker tape as a tool to improve his/her stock selection and trading. In many cases, one doesn't need to sit in front of a racing ticker tape all day and get bleary eyed. Computer programs can sort out the key data. Also, one can set up eSignal in certain ways to watch selected stocks, perhaps of firms with strong earnings.

How can the ticker tape be used?
Well, the first thing one must remember is that the ticker tape records trading transactions as they are happening. The sequence of the trades on an individual stock, the price and the volume on each tick are the bulk of the information. In short, it is the "time and sale" data for a stock.

Something called a "broad tape" (put out by Dow Jones) carries news. We are not interested in that. We only want to see the flow of prices on stocks as it is taking place. The key data you want to look for is large block transactions going off at significantly higher prices than the prior trade or a prior big block. In short, big blocks on upticks. A pattern of that kind of buying during the day or over a short period of time can tip you off that there is strong demand for the stock. It is a bullish omen.

Conversely, big blocks going off at lower prices than the prior trade could well be very important distribution. One can quickly develop a "feel" for a stock by knowing what a significant big block is. An important block for IBM may be 100,000 shares; for a thinly-traded stock, it may be 10,000 shares.

By watching the tape action of a stock, or by going back and looking at the "time and sale," one can get a sense of how a stock is "acting." That's very important at special times in a technical situation, such as a breakout from a base or after a selloff. It can tell you if the breakout is working well or if bargain hunters are stepping up after a quality stock falls and a bottom is about to form.

Generally speaking, watching the tape action of a stock is not that difficult once you get the data and take some time to read it. Truly, the tape does talk. That information correlates with the charting pattern of a stock, which, in turn, can be linked to the profitability and value of a company's business.

Take the case of Invision Technologies (INVN), a maker of explosion detection systems. The stock moved out of a basing pattern on October 5, 2001 and closed at $11.80. Volume swelled to 3 million shares, no doubt due to prospects of getting big contracts for the war on terror. A study of Invision's tape that day showed several large blocks going off at sequentially higher prices indicating aggressive buying. At 11:32 a.m. Eastern Time, a block of 25,000 shares traded at $12.03, up from the prior large block (10,000 shares) at $11. That was followed by another block of 20,000 shares at $12.17, and, then, shortly afterwards, a block of 25,000 shares crossed at $12.20. Invision went on to hit $47 — a gain of 292 percent — by mid-December. The stock was one of the big winners of the year. Its key move was confirmed by the powerful tape action on October 5.

More recently, well known broker Charles Schwab Corp. (SCH) emerged from a base on January 3, 2002 with a move to $16.85, cutting through the top of its base at $16. The tape was extremely bullish. A block of 100,000 shares crossed at $16.10 at 10:18 a.m. Eastern Time. That was up 11 cents from the prior big block that went off at $15.99. Five minutes later a block of 135,200 shares crossed at $16.15, up five cents from the prior block.

The next day, Schwab gapped higher, hitting $19 on the heaviest volume in more than six months. It remains to be seen how Schwab will do, but the tape and technicals are working. Also, other brokerage issues, such as E-Trade Group, Inc. (ET), are doing well too. Schwab is expected to show a 52 percent increase in net this year to 44 cents a share from the depressed 29 cents last year.

Mr. Fasciocco’s articles appear on www.tickertapedigest.com. He is an independent contributing writer for several national publications. He is also president of Corona Investment Management. To get a free trial subscription to the Ticker Tape Digest Pro Report, which comes out daily on the web with midday updates, send an email message to freetrial@tickertapedigest.com. Mr. Fasciocco can be reached by email at leo@tickertapedigest.com.