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TICK16 is the next generation of the classic breadth indicator TICK index. It offers many advantages over the original index and is much more useful for the current hectic trading environment. I am going to cover some basic usages of this powerful tool.

What is TICK Index?

To understand what is TICK16 we must start from something more basic – the NYSE Tick Index.

The NYSE Tick Index sum up the TICK of each individually traded symbols in NYSE into one number. This number is called the TICK index.

The TICK of a symbol can have only 2 values, either +1 or -1.

When a symbol’s last traded price is higher than the previous trade, its TICK value is set to + 1.

When a symbol’s last traded price is lower than the preivous trade, its TICK value is set to – 1.

When the last traded price is equal to the previously traded price, the TICK value will assume its own previous value.

TICK index can go as high as +2000 to +3000 or as low as -2000 to -3000. But most of the time it stays within +1000 to -1000 range.

Daytraders like to watch the TICK index closely because it is a great short term breadth indicator telling the strength of the market at the moment.

The problem is, TICK index is transmitted only every 15 to 30 secs, depending on the data feed you are using, thus it is not really timely enough when we need to make trading decisions within a few seconds.

The other issue is that TICK index is based on the broad NYSE market, not the selected issues within the index or index future we are trading (like emini SP, emini NQ, SPY, QQQ, etc.), thus the information provided may not be relevant to our trading at all from time to time.

Due to these reasons, we seeked for a better TICK index and the series of indices based on TICK16 are the results.

(Lawrence – the original article on Tick16 was posted in the Tickquest forum back in 2003, I have revised the information here to make the information more useful for NeoTicker 4)

What are TICK16 Based Indices?

TICK16 of a symbol is the sum of the last 16 values of the TICK value of that symbol.

It is available as a quote field in the quote window of NeoTicker.

When we sum up the TICK16 values of the S&P 500 index component stocks, we get SP_TICK16 index. It is our own custom real-time breadth index.

It updates frequent enough that you can see exactly whats going on as oppose to wait for the next update on the TICK index. It also contains only the relevant symbols related to our S&P500 index thus will not be affected by other unncessary information.

Similarly, if you sum up the TICK16 values of the Nasdaq 100 components, you get the ND_TICK16 index. You can also use your own customized baskets to construct other TICK16 indices.

Constructing Tick16 Indices Using NeoBreadth

We have already predefined various Tick16 indices for the common market indices within NeoTicker. All you have to do is to activate the data collection. To activated the S&P 500 Tick16 index (SP_TICK16),

1. Open the NeoBreadth Manager within NeoTicker.

2. Select TICK16 from the list of predefined Breadth Definitions. Details of the TICK16 breadth definition will show up in the Breadth Definition Editor on the right hand side.

3. Enable SP_TICK16 by checking the On field of the SP_TICK16 symbol.

4. Press the Save button and choose to enable the Tick16 breadth definition when you are prompted.

One very important thing to remember is that if your datafeed subscription cannot handle 500 or more symbols, you should not enable SP_TICK16 because that will make you exceed your data feed subscription symbol limit. Instead, you can enable the other TICK16 indices like DJ_TICK16, OX_TICK16 or ND_TICK16.

Once the SP_TICK16 symbol is enabled, it will sum up the TICK16 field value of the component symbols into one single number every second.

In NeoTicker, the NeoTicker defined breadth symbols like SP_TICK16 behaves exactly like any other symbols you receive from your data vendor. You can put them in chart, quotes, even time and sales windows.

SP_Tick16 vs Tick Index

Here is a 5-second chart of emini S&P, SP_TICK16, and TICK Index.

At this resolution, we can clearly see the difference in the update frequency of SP_TICK16 and TICK.

The frequent update of SP_TICK16 gives you a leading edge in anticipating the next swing in the market., while TICK index does not have enough updates in real-time which can delay your real-time decisions.

TICK16 Basics

Next, we will discuss the general behaviour of TICK16.

Here is a screenshot of Emini SP, SP_TICK16, and TICK Index.

First, notice the formation of both SP_TICK16 and TICK indices are similar but not the same.

On big picture scale like the one I have here, the main differences are the value levels.

For TICK, it ranged from + 1200 to – 800.

For SP_TICK16, it ranged from + 4000 to – 3000.

The SP_TICK16 index is centered around zero all the time, while the TICK index from time to time sit above 200 and not coming back down (in the morning).

Why TICK Index hold up at a higher level?

Thats because the less active symbols did not traded over that period of time holded onto their old values from multiple minutes to several hours ago. These stale symbols are affecting the TICK index calculation.

Thus the classic rule to watch the zero line action on the TICK index works even better with SP_TICK16.

For extreme levels, the SP_TICK16 likes 1000, 2000, 3000, and 4000 and that works consistently every day, while TICK index from time to time stuck at very high or very low range due to the stale symbol issue we mentioned.

SP_TICK16 work similarly like the TICK index in terms of divergence signals, so divergence setups that take about an hour to form are usually the major turning points of the day.

An interesting comparison of SP_TICK16 and TICK index is the 3:00 pm setup. SP_TICK16 did not even make a new high comparing to the swing high from 15 minutes ago, while the TICK index ran to the extreme.

If you cannot construct SP_TICK16 due to symbol limit, don’t worry. You can enable OX_TICK16 which has similar behaviour like SP_TICK16 in terms of divergence setups. The disadvantage is that the extreme readings are less profound.

Summary

Tick16 indices are very interesting customized breadth indices. They are great tools for confirming and identifying possible short term turning points. I will post some example usages when I get the chance.

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