Hi JRH,
<<Warp, how do you interpret this high TRIN? What is it telling you?>>
TRIN finished the day at 3.01. This is really, really high. A massive amount of panic dumping today. But I guess we already know that. This dumping appears largely confined to the NYSE, since the NASDAQ TRIN checked in at a relatively sedate 1.45. The NASDAQ equities are typically much more volatile, and the NAZ TRIN typically runs to the extreme of the NYSE.
TRIN is the ratio of ((Up Equities)/(Down equities)) / ((Up shares traded)/(Down shares traded)) in the NYSE. If on a given day, 50% of NYSE stocks are up and 50% are down, and 50% of the traded volume is up, and 50% is down, then the TRIN is 1.0.
If on another day, 50% of stocks are up and 50% down, but the volume ratio is 33% up vs. 66% down, then the TRIN is 2.0, considered to be a very high number. Half of the stocks account for 2/3 of the down volume. This is indicative that many stocks are being dumped indiscriminately. Of course today we hit a 3.0.
The other thing to mention, the 10DMA of this TRIN is called the ARMS Index. Currently it is registering a 1.56. Historically, anytime the ARMS Index breached 1.50, a bull market commenced within the next 4 weeks. The dumping/oversold state persisted for such a long period that all of the sellers were cleaned out, setting the stage for a bull run. This indicator was considered "perfect" for 40 years - since it always worked. I personally profited by positioning for the bull market upon getting this signal.
However, we got such a signal in late January, and it failed to produce anything that could be called a bull rally. At that time, the dumping was directly attributable to ENE and other "accounting irregularities" issues such as HC, ELN, TYC and a handful of others. The 1.50 on the ARMS Index was an anomoly, its existence was not confirmed in other key market oversold indicators.
Warp |
