e-TICK TOOLS Core Concepts

One of the most powerful elements of e-Tick Tools its ability to speak succinctly to the nature of behavioral market events and their characterWhat is occurring at all e-Tick Tools extremes is a form of CAPITULATION. Small or large, fast or slow or on low volume or large volume.

What is transpiring at a sell and buy extreme and why they can be so important? Why this feedback can tell us something about the light switches in the markets that often flip sentiment at specific prices and places?

Occasionally, traders can identify with some confidence when capitulation in the markets may be occurring but rarely with consistency, accuracy and/or perspective. e-Tick Tools activates this capability on a unprecedented and dynamic scale.

What is capitulation?

e-Tick Tools watches the market for this kind of activity and cross references each metric that defines its definition of capitulation with data in its databases and indexes of extreme trader behavior. When a sufficient amount of capitulatory behavior is discovered, e-Tick Tools begins tracking the prices of the capitulatory event - this is when the price tracking indication will appear on a Tick Tools chart. Subsequently, as a market reverts to orderly execution, capitulation is deemed to be complete. At this stage, one of the several types of CONFIRMATION indications display. We know of no other tool that knows how to do this type of analysis of trade tickets activity in real-time - one of the unique and powerful core capability of e-Tick Tools.

If we now understand that each of the e-Tick Tools Buy or Sell Extreme are capitulatory - we know a lot about the traders executing trades at these points. We can watch for key subsequent behavior from the various classes of trader. Professional traders (a class of trader in our case) prefer to operate when the market becomes disorderly. Therefore, they prefer to short highs where the consensus market participants (another class of trader in our model) elect to stop out of short risk. Additionally, they also prefer to buy lows where the consensus trader is reducing or close long risk. Tick Tools knows this, and draws a line in the sand (Price Tracking). As professionals act at these capitulatory locations, the prices will become support or resistance and likely be defended. If price tracking levels break in a significant manner then it is a definite clue that the most skilled traders are vacating or being evicted from their positions. At these points, capitulation extremes may be able to be deemed to have been part of a larger directional momentum.

One of the most compelling concepts implemented by e-Tick Tools as a way to relate this data is the stratification of ways to represent the measurement of it: Normal capitulation, Lazy Capitulation, and X-Treme Capitulation. The difference between Lazy and Normal capitulation is not very significant for the user though this distinction is imperative for e-Tick Tools internally. Normal capitulation can be emotional market behavior that ranks in the top 70 percentile of extreme aberration and capitulatory behavior. For X-Ticks (X-Treme Capitulation) this must score in the top 7% or 93 percentile of all emotional behavior in the markets in the last 15+ years in the e-Tick Tools Database. These is remarkably valuable data analysis that is not price dependent or reactive to latent analysis. This analysis occurs instantly.

The next core concept in e-Tick Tools is that each capitulatory extreme that appears for any single day MUST distinguish from the previous one in some way that makes it more extreme and more significant. So, in the BUY extreme examples labeled above, each successive extreme is more significant than the previous one. So, number 3 is much more significant than number 1. Number 6 requires MUCH MUCH more market effort to trigger than extremes 2, 3, or 4. This is the same rule on the sell extremes labeled

This convention enables the ability to rank instinctually market participation in an organic way and also a sensible and innately understandable way for human consumption. It also allows this understanding to transmit very quickly. The other capability enabled by this type of convention is the ability to evaluate price behavior progress in a totally new way. For example, if the market has been rallying (as in the above chart) and then gets the strongest SELL EXTREME of the day which does not break below a previous sell extreme or make a lower swing low - this demonstrates clearly that the sellers pushed the hardest they could so far that day but accomplished little price progress. The same is valid in reverse. These types of examples will be detailed more in other slides.

Lastly, X-TICK’s are among the most powerful feedback  able to be gleaned from a market. Most often the level of capitulation occurring at an X-TICK is strong enough to spike put/call ratios and the VIX INDEX alike up or down. However, its the subsequent reaction or follow through that matters. Once these EXTREMES confirm with their confirmation indications - support or resistance is created. If these levels are broken-out professionals taking the opposite side are being run over and take out. If they hold then professionals have committed, and the levels will likely be significant stopping points. Impacts from X-TICK’s are usually more significant than for an hour or two. Quite often, they can be a pivot to a major and extended longer-term market reactions.

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