New Indicator Magic
At 10AM There is NEWS
So at 10am, some guy said a thing, and that caused a major reaction in the ES. The indicator over the price is the new ZTP Tick Context Filter and in Panel 1 the ZTP Flow Ribbon rolls over. All of the indicators in the lower panels are based off of the exclusive ZTP Delta Strength indicator. New to this picture is the ZTP Leg Ledger in Panel 2 and the ZTP Absorption Meter in Panel 3. These are both new and previously not seen.
In Panel 2, if you expand the picture, you will see red and green bars, which are showing the strength, relative to the last zigzag. Additionally it has a ribbon on the bottom that, according to Delta Strength, is increasing or decreasing in buy/sell pressure. So at 1012 AM there would be a strong trend trade that had 5X the strength of the previous down leg. The following down leg has 1.76X of that previous strong move.
But the ZTP Absorption Meter is telling us a lot more. Each zone is labeled BUYERS / SELLERS. This is the indicator telling us who it thinks is in control. It’s not going to flip just because of a zigzag, unless you want it to. That is available, but not demonstrated here.
Absorption Meter
The ZTP Absorption Meter is telling us if the Delta Strength is exceeding what is expected (in green) its about what’s expected (in grey) or it is underperforming (in yellow).
Coming off the lows the ZTP Absorption Meter is telling us the sellers have lost that edge. The sellers hammered it to the lows but at ZTP Strong Trend Support zone, they began to cover, but the dumb money just continued shorting. The Tick Context does a good job picking up the buy signals with the green triangles. Also note the black counter trend signals at the 1008 low. These are all being created by $TICK.
The ZTP Leg Ledger shows the seller strength drying up then the buy side exploding at 21X. The pullback was a weak 7% and that strong trend trade and takes off higher. Now the Absorption Meter is telling the buyers are exceeding what was expected from the move. What is happening is that resistance, in the form of limit orders, is lifting and the Absorption Meter is picking that up.
But do you see the problem the Absorption Meter is telling us? On each move higher, the strength is less, compared to the last move. The Flow Ribbon is still strong green, but that’s not going to last.
The Tick Context does a nice job at calling the top, and the Absorption Meter at the same time see the selling in the ribbon on the panel bottom. The black diamond is a counter trend signal developed by the $TICK. The Flow Ribbon goes neutral then red.
On the right side of the chart, the buyer can not recover and all the ZTP signals to the buy side are weak on the test of the previous high. Maybe that guy said another thing? So if it’s not going any higher, the next stop is 25 points lower. What’s interesting about both the Tick Context and the Absorption Meter ribbons, are that at extremes, you see reversals.
62 Points Lower
The Absorption Meter tells the story. The sellers were outperforming the entire way down. The buyers underperformed on the short covering and that led to something unusual.
It is not very often the Tick Context paints red at a high, and even more rare when you get $TICK sell signal at a high. That was a 19 point drop.
Software Update Announcement
Unfortunately there isn’t one. I ran into a bug that took the entire weekend to fix, which is why the testing is important. There are also 2-3 additional indicators I haven’t even shown here yet.
There is still testing to do on the problem that was worked this weekend.
I also want to add the Delta Strength to the Tick Context as a parameter you can engage for additional information and a more accurate indicator. That was supposed to be the work to finish this weekend.
My plan is to announce a Zoom meeting which will be recorded. All of the updated indicators will be presented and you can ask any questions about what we have gone over.