Cosmo, this thread discussed TRIN and ARMS in March, during the previous market collapse. On those few historical occasions when the ARMS Index has breached 1.50 to the upside, it has always signaled a major buying opportunity.
Note, TRIN is currently listed ticking at 2.41. Should the index close over 2.0 today, the rare 1.5 level for the ARMS Index will be triggered again for the second time this year. 1.5 is achieved very rarely, on average about 5-10 times in a decade. Note that when the ARMS Index does top 1.5, the reversal could take place either the next day or may be a few weeks away.
Here is a definition of the ARMS Index, from the Don Hays Web Site.
<<In my opinion, this is one of the best technical indicators of any that has ever been developed to gauge when
conditions are right to produce a significant buying juncture. It is calculated by taking the quotient of the number of
stocks advancing divided by the number declining, and then dividing that by the quotient of the volume being traded
in those stocks advancing by the volume of the declining stocks. From a practical stance, this is simply a way to
measure the energy required to produce the up and down moves. If it takes too much energy to produce an up
move, the 10-day moving average of the Arms index would move very low, with a signal under 0.70 being
considered very negative for the next 90 days market action. But more significantly, and more reliable is the action
on serious market declines. Almost all serious market declines will produce a level of 1.30 or higher. On the very
rare times this indicator moves above 1.50, it is an extremely strong sign that has always produced a significant
major buying juncture within the following 20 days.>>
Hope this helps |
