Paul, here is a good read on the Trin.
Ascani's GMSTechStreet.com
"10 TRIN" Countdown To A Low
Dan Ascani, President and Director of Research
Global Market Strategists, Inc.
©2001-2003
(updated 27-Jan-03)
As I typically say, "let the countdown begin—yet again!" After a record four "10 TRIN" countdowns during 2002—and after six 10 TRIN
countdowns since the Great Bear Market began in 2000— the 10-day average of the Arm's Trader's Index (TRIN) moved above 1.50 yet
again. On December 27, it moved to 1.61. THEN, it did it again--moving to 1.53 on January 27, 2003. What's going on? The greatest bear
market since the 1930s, that's what!
Let's take another look at the history of this average and what it means for the market when it moves above 1.50.
In 2001, I first presented the following study that I now refer to as "10 TRIN." It is a study of the Dow's reaction to very oversold TRIN
readings. This study was first featured in the March 2001 issue of The Global Market Strategist when the "10 TRIN" average moved above
1.50 on March 16, 2001— the first time it had done so since October 1997. View Dow chart featured in that issue illustration 10 TRIN
episodes over 1.50.
The 10-day average of Arms TRIN had risen to a level greater than 1.50 only a few times in the past forty years, each time leading to a
rally soon thereafter. But it has done so a record four times in one calendar year in 2002! Peter Eliades of stockmarketcycles.com first
brought this to my attention. Here is an updated table reflecting the history of the 10-day TRIN indicator since 1958 and the number of
market days until the final bottom:
May 28, 1962 19 days to final bottom
October 1, 1962 17 days to final bottom
October 7, 1966 Exact day of closing low
May 4, 1970 16 days to final bottom
September 30, 1974 4 days to final bottom
November 19, 1974 13 days to final bottom
March 24, 1980 3 days to final bottom
September 3, 1981 16 days to final bottom
August 6, 1982 1 day to final bottom
October 16, 1987 2 days to intraday bottom
November 30, 1987 4 days to final bottom
October 27, 1997 1 day to final bottom
March 16, 2001 11 days to final bottom
August 15, 2001 23 days to final bottom
January 16, 2002 15 days to final bottom
April 11, 2002 18 days to final bottom
June 6, 2002 34 days to final bottom
September 4, 2002 25 days to final bottom
December 27, 2002 Exact day of closing low, but...
January 27, 2003 ...yet another countdown begins so close to prior event -- unprecendented
During the Great Bear Market in stocks that began in March 2000, the 10-day TRIN has achieved a level over 1.50 only 7 times. On March
16, 2001, the Dow closed at 9823.41 and fell another 716.84 points in 6 calendar days to a March 22 low of 9106.54 before rebounding to
an intraday high of 9992.53 on April 2, 2001. The final intraday low occurred on April 4 at 9375.72—a higher intraday low for the Dow than
that of the March 22 low of 9106.54, but not for the broader S&P 500 and Nasdaq indices, which did not bottom until April 3 on a closing
basis and which included a Nasdaq collapse into its April 4 closing and intraday low.
The next time the 10-day TRIN moved to a level greater than 1.50 was on August 15, 2001, less than one calendar month before the
infamous cataclysm of September 11, 2001, and slightly more than one month before the market’s ultimate low for 2001 of Dow 8062.34 on
September 21, 2001—the precise due date of our 9-month cycle low. The Dow had closed on August 15, 2001 at 10,345.95—eerily close to
its 10,381.73 close one day ago on Wednesday, April 10, 2002. But the Dow fell another 2,283.61 points in 23 market days before the price
low was seen.
The September 21, 2001 low constitutes and extreme situation since the mainland of the United States has not been attacked in modern
times. Circumstances surrounding the attack that resulted in a 4-day closure of the stock exchange likely contributed to this period
registering the longest countdown to a low—23 days. On the other end of the spectrum, the shortest countdown was on October 7, 1966,
when the 1.50 reading occurred the precise day of the low.
The April 11, 2002 reading over 1.50 resulted in another 18 days and 369 Dow points before the bottom was reached. But the low was right
within the parameters typical for a "10 TRIN Low" as defined by the past 40 years of market action. Further supplementary analysis of the
April/May TRIN "episode" was provided in our GMSTechStreet.com Daily Web Update for Traders of April 18, 2002.
Unique and particularly intriguing is the 10 TRIN countdown of June-July 2002. The market had never in its modern history taken more than
23 market days to reach a significant and tradable low after the 10-day TRIN average moved above 1.50. But after the June 6 reading of
1.59, the market took a full 34 market days to bottom—the longest ever. The subsequent 3-week rally was the briefest in duration between
readings above 1.50. The 10-day TRIN moved back above 1.50 yet again on September 4, 2002, in month #47 of the 48 that comprise the
4-year cycle, which is due to bottom nominally in October 2002. Presumably, the market is now beginning to set itself up for the 4-year
cycle low.
Finally, for a fifth time in 2002, the 10-day TRIN moved above 1.50 on December 27, 2002, the precise day of the low in the Dow Industrial
Average. The high number of 10-day TRIN readings over 1.50 during 2002 testifies to the severity of the bear market in progress. Thus far,
each price low and rally phase following the beginning of the 10-TRIN countdown has been followed in turn by more bear market lows.
Then, 2003 began with a bang ... with the 1.53 reading January 27, 2003. That means a low any time from January 27 until March 13, 2003
-- 34 days from the initial 1.50+ reading -- if history is a guide!
After signaling a new "10 TRIN Countdown" to a low a record six times in 2002, it has again signaled a "10 TRIN countdown" for a seventh
time, on December 27, 2002 -- then an eighth on January 27, 2003. The Dow bottomed right on December 27, but then began a new 10
TRIN countdown only a month later. An ominous pattern of a great bear market? High TRIN readings mean lots of selling -- the
characteristic of ... well, an ominous pattern in a great bear market.
Each time the 10-day average of the Arms Traders Index has moved above 1.50, the Dow has bottomed within 34 market days. Is the
market setting up for a 4-year cycle low within 34 days of the September 4 "10 TRIN" start date?
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