The Spike-Sell Indicator: How to Spot Small-Cap Exhaustion in Thinkorswim
If you’ve ever traded a small-cap stock that rockets 50% in minutes… you know what usually comes next. The parabolic spike is often followed by a brutal reversal, and most traders give back gains because they don’t spot the exhaustion in time.
That’s why I built the Spike-Sell Indicator for Thinkorswim. It’s free, and you can get it instantly by dropping your email below — I’ll send you the code and my personal settings.
Note: The indicator will only send after you confirm your email. Make sure you click the confirmation link and check your junk/spam if it is not showing in your inbox.
What the Indicator Does
The indicator plots red arrows when a small-cap spike shows signs of exhaustion. It looks for three conditions to stack together:
- Short-term RSI is extremely overbought
- I use RSI(2) and a threshold of 95+. This flags extreme momentum.
- Volume climax
- The current bar’s volume must be at least 2× the average volume of the past 50 bars. This is the “blow-off” moment when everyone piles in at once.
- Parabolic price action
- A single candle that’s up at least 8% from the previous close.
- The body of the candle must be strong (at least 60% of the total range).
- The range itself must be at least 2× the 14-period ATR.
When these stack together, the script plots a down arrow on the chart, alerting you that the spike could be near exhaustion.
How to Use It
- Chart timeframes: Works best on 1-min or 5-min charts near the open when small caps are most active.
- Symbols: The script can’t filter for market cap by itself, so apply it on a small-cap watchlist you’ve already built.
- Signals: Don’t treat arrows as “short now.” They’re warnings that probability of reversal has spiked. Always combine with your own levels (pre-market high, VWAP, daily resistance).
- Noise vs strictness: The indicator has a toggle in settings:
- Strict mode requires all conditions to trigger (fewer but higher-quality signals).
- Looser mode relaxes the criteria to catch more setups.
Example Chart
Notice how the arrow doesn’t call the exact top to the tick — it appears once the exhaustion bar closes. That’s intentional. You want confirmation, not intrabar noise.
Why It Matters
Trading is about stacking odds in your favor. With small caps, the odds shift fast. When RSI is maxed out, volume is climaxing, and price action goes vertical, history shows the probability of a reversal is high.
This indicator makes it visual and automatic, so you don’t have to rely on gut feel while the chart is flying.
Get the Code Free
I’m giving this indicator away. Drop your email below and I’ll send you:
- The full Thinkorswim script (copy + paste ready).
- My default settings for strict and loose modes.
- A quick checklist PDF I use when deciding whether to act on a signal.
Important Disclaimer
This indicator is a tool, not a magic predictor. No signal is perfect. Always use proper risk management, and never trade based solely on an arrow. I’m sharing this for educational purposes only, not as financial advice.
