Hi Greg:
The formula for calculating the ARMs index is the sum of the advancing issues/declining issues divided by the sum of advancing volume/declining volume. The index shows selling or buying pressure. A reading of below .5 means that the advancing volume is stronger than the number of advancing stocks. Money is chasing stocks. A reading of 1.5 is the reverse. 1 is the balance point. I primarily use the ARMs to determine where money pressure is--buying or selling. It is of some use during the day.
Another use of the ARMs indicator is by averaging the reading over a period of days. The 5-day ARMs reading is talked about a good deal. There are others also. For the 5-day ARMs, a reading of less than 4 is believed to mean that there will be a drop in the market. A reading of over 6 is believed to mean that there will be selling in the near future. However, the 5-day ARMs is unreliable.
Below is the reason why I consider the 5-day ARMs to be unreliable in the normal sense of calling a turn. However, the period from about 11/97 to 1/98 was flawless in its predictive value. I can only conclude that that period was an aberration. Below is the date, daily closing DJI, and the 5-day ARMs reading as of the date indicated.
As can be seen, the 5-day ARMs was consistently giving sell signals from 3.72 to 3.99 at the start of this bull run. Paying attention to these readings would have resulted in a good beating. However if we look at them as confirming the strength of the bull run, then they may be of some use.
3/16/98 8718 3.97
3/13/98 8602 4.29
3/12/98 8659 3.99
3/11/98 8675 4.17
3/10/98 8643 4.28
3/9/98 8567 4.48
3/6/98 8569 4.43
3/5/98 8444 4.67
3/4/98 8539 4.47
3/3/98 8584 4.30
3/2/98 8550 4.89
2/27/98 8545 4.75
2/26/98 8490 4.70
2/25/98 8457 5.06
2/24/98 8370 4.93
2/23/98 8410 4.54
2/20/98 8413 4.60
2/19/98 8375 4.56
2/18/98 8451 4.21
2/17/98 8398 4.29
2/13/98 8370 4.24
2/12/98 8369 4.05
2/11/98 8314 4.38
2/10/98 8295 4.33
2/9/98 8180 4.40
2/6/98 8189 3.92
2/5/98 8117 4.17
2/4/98 8129 3.76
2/3/98 8160 3.98
2/2/98 8107 3.99
In the following figures, the DJI did not do much of anything. However on 6/16/95 the 5-day ARMs gave a sell signal of 3.70. It followed up with a 3.80 on 6/22/95. Two sell signals and then the DJI went up 200 points. However, it came back down after that. The call was wrong and there was no confirmation of any trend. We just went nowhere.
9/15/95 4797 4.68
9/14/95 4801 4.59
9/13/95 4765 4.73
9/12/95 4747 4.57
9/11/95 4704 4.23
9/8/95 4700 4.16
9/7/95 4669 4.28
9/6/95 4683 4.13
9/5/95 4670 4.20
9/1/95 4647 4.62
8/31/95 4610 4.84
8/30/95 4604 4.87
8/29/95 4608 5.13
8/28/95 4594 4.92
8/25/95 4601 5.03
8/24/95 4580 4.96
8/23/95 4584 4.83
8/22/95 4620 4.80
8/21/95 4614 4.97
8/18/95 4617 4.53
8/17/95 4630 4.66
8/16/95 4639 4.70
8/15/95 4640 4.93
8/14/95 4659 4.99
8/11/95 4618 5.24
8/10/95 4643 5.00
8/9/95 4671 4.78
8/8/95 4693 4.75
8/7/95 4693 4.74
8/4/95 4683 4.83
8/3/95 4701 5.15
8/2/95 4690 5.02
8/1/95 4700 4.70
7/31/95 4708 4.36
7/28/95 4715 4.18
7/27/95 4732 4.02
7/26/95 4707 4.19
7/25/95 4714 4.47
7/24/95 4668 5.01
7/21/95 4641 4.89
7/20/95 4641 4.84
7/19/95 4628 4.74
7/18/95 4686 4.11
7/17/95 4736 4.13
7/14/95 4708 4.34
7/13/95 4727 4.32
7/12/95 4727 4.26
7/11/95 4680 4.54
7/10/95 4702 3.91
7/7/95 4702 4.06
7/6/95 4664 3.94
7/5/95 4615 4.40
7/3/95 4585 4.88
6/30/95 4556 5.99
6/29/95 4550 5.79
6/28/95 4556 5.56
6/27/95 4542 5.56
6/26/95 4551 5.08
6/23/95 4585 4.01
6/22/95 4589 3.80
6/21/95 4547 4.08
6/20/95 4550 3.92
6/19/95 4553 3.63
6/16/95 4510 3.70
6/15/95 4496 4.08
6/14/95 4491 4.16
6/13/95 4484 4.34
6/12/95 4446 4.65
6/9/95 4423 4.87
6/8/95 4458 5.19
6/7/95 4462 5.14
6/6/95 4485 4.40
6/5/95 4476 4.93
6/2/95 4444 5.88
6/1/95 4472 5.38
5/31/95 4465 5.51
5/30/95 4378 5.80
5/26/95 4369 5.00
5/25/95 4412 3.99
5/24/95 4438 4.46
5/23/95 4436 4.37
5/22/95 4395 5.05
5/19/95 4341 5.27
5/18/95 4340 5.17
5/17/95 4422 4.56
5/16/95 4435 4.35
5/15/95 4437 3.93
5/12/95 4430 3.92
Below is another period of time. For 5 days at the beginning of the period, the 5-day ARMs gave sell readings from 3.62 to 3.97. Once again, the DJI went up.
4/28/95 4321 4.61
4/27/95 4314 4.37
4/26/95 4299 4.40
4/25/95 4300 4.72
4/24/95 4303 4.49
4/21/95 4270 5.20
4/20/95 4230 5.40
4/19/95 4207 5.01
4/18/95 4179 4.90
4/17/95 4195 4.79
4/13/95 4208 4.40
4/12/95 4197 4.38
4/11/95 4187 4.57
4/10/95 4198 4.46
4/7/95 4192 4.33
4/6/95 4205 4.66
4/5/95 4200 4.64
4/4/95 4210 4.83
4/3/95 4168 4.62
3/31/95 4157 4.52
3/30/95 4172 3.90
3/29/95 4160 3.85
3/28/95 4151 3.62
3/27/95 4157 3.67
3/24/95 4138 3.97
The next stretch of numbers gives some good calls and bad calls. But after all that I have shown, does anyone really want to rely on this .
1/24/95 3862 4.86
1/23/95 3867 4.86
1/20/95 3869 4.87
1/19/95 3882 4.60
1/18/95 3928 4.31
1/17/95 3930 3.87
1/16/95 3932 4.04
1/13/95 3908 4.22
1/12/95 3859 4.61
1/11/95 3862 4.62
1/10/95 3866 5.08
1/9/95 3861 5.11
1/6/95 3867 5.62
1/5/95 3850 5.29
1/4/95 3857 5.27
1/3/95 3838 5.13
12/30/94 3834 4.93
12/29/94 3833 4.87
12/28/94 3839 5.23
12/27/94 3862 5.46
12/23/94 3833 5.37
12/22/94 3815 5.08
12/21/94 3802 5.14
12/20/94 3767 4.60
12/19/94 3791 4.34
12/16/94 3807 4.20
12/15/94 3765 4.17
12/14/94 3746 4.15
12/13/94 3715 4.62
12/12/94 3718 4.76
12/9/94 3691 4.93
12/8/94 3686 5.14
12/7/94 3736 5.59
12/6/94 3746 5.92
12/5/94 3742 5.59
12/2/94 3746 5.36
12/1/94 3701 5.22
11/30/94 3739 4.37
11/29/94 3739 4.76
11/28/94 3740 5.25
11/25/94 3708 5.60
11/23/94 3675 6.01
11/22/94 3678 6.02
11/21/94 3770 5.21
11/18/94 3815 4.74
11/17/94 3828 4.50
11/16/94 3845 4.23
11/15/94 3826 4.20
11/14/94 3830 3.85
11/11/94 3801 3.84
11/10/94 3822 4.18
11/9/94 3832 4.05
11/8/94 3831 4.02
11/7/94 3809 4.39
11/4/94 3808 4.94
11/3/94 3846 4.27
11/2/94 3837 4.27
11/1/94 3863 4.07
10/31/94 3908 3.88
10/28/94 3931 3.72
10/27/94 3875 4.41
10/26/94 3848 4.71
10/25/94 3851 4.57
10/24/94 3855 4.78
10/21/94 3891 4.63
10/20/94 3911 4.09
10/19/94 3936 4.10
10/18/94 3918 4.32
10/17/94 3924 4.06
10/14/94 3910 3.80
10/13/94 3890 3.83
10/13/94 3875 3.91
10/11/94 3877 3.84
10/10/94 3821 5.16
10/7/94 3797 5.37
10/6/94 3776 5.61
10/5/94 3787 5.67
10/4/94 3801 5.91
10/3/94 3847 4.61
9/30/94 3843 4.64
9/29/94 3855 4.67
9/28/94 3878 4.44
9/27/94 3863 4.21
9/26/94 3849 4.75
9/23/94 3832 4.65
9/22/94 3837 4.86
9/21/94 3852 4.49
9/20/94 3869 4.62
9/19/94 3937 3.47
9/16/94 3933 3.43
9/15/94 3954 3.39
9/14/94 3895 3.61
9/13/94 3880 3.78
9/12/94 3860 4.45
9/9/94 3875 4.81
9/8/94 3908 4.93
9/7/94 3886 5.24
9/6/94 3899 4.92
9/2/94 3886 4.89
9/1/94 3901 4.32
8/31/94 3913 4.00
8/30/94 3917 3.53
8/29/94 3899 3.71
8/26/94 3881 3.75
8/25/94 3830 4.07
8/24/94 3847 4.15
8/23/94 3776 4.32
8/22/94 3751 3.96
8/19/94 3755 4.10
8/18/94 3755 4.00
8/17/94 3776 3.79
8/16/94 3785 3.73
8/15/94 3760 3.85
8/12/94 3769 3.75
8/11/94 3751 3.83
8/10/94 3767 4.25
8/9/94 3756 4.29
8/8/94 3754 4.50
8/5/94 3747 4.30
8/4/94 3766 4.13
8/3/94 3793 3.70
8/2/94 3796 3.93
8/1/94 3798 3.95
7/29/94 3765 4.05
7/28/94 3731 4.25
7/27/94 3720 4.16
7/26/94 3736 4.36
7/25/94 3742 4.77
7/22/94 3735 4.69
7/21/94 3732 4.76
7/20/94 3727 4.86
7/19/94 3748 4.58
7/18/94 3755 4.23
7/15/94 3754 4.57
7/14/94 3739 4.23
7/13/94 3704 4.24
7/12/94 3703 4.37
7/11/94 3703 4.40
7/8/94 3709 4.20
7/7/94 3688 5.17
7/6/94 3675 5.23
7/5/94 3652 4.97
7/1/94 3647 4.50
6/30/94 3625 4.92
6/29/94 3667 4.58
6/28/94 3670 4.61
6/27/94 3686 4.78
6/24/94 3637 5.23
6/23/94 3699 5.40
6/22/94 3725 5.19
6/21/94 3708 5.24
6/20/94 3742 4.97
6/17/94 3777 4.59
6/16/94 3811 4.10
6/15/94 3790 4.31
6/14/94 3815 4.74
6/13/94 3783 5.21
6/10/94 3773 6.10
6/9/94 3753 6.26
6/8/94 3749 6.12
6/7/94 3756 5.58
6/6/94 3769 5.38
6/3/94 3772 5.04
6/2/94 3759 5.04
6/1/94 3761 4.68
5/31/94 3758 3.92
5/27/94 3757 3.87
5/26/94 3753 3.73
5/25/94 3755 3.26
5/24/94 3745 3.23
5/23/94 3742 3.87
5/20/94 3766 3.77
5/19/94 3759 3.66
5/18/94 3733 3.85
5/17/94 3721 4.28
5/16/94 3672 4.34
5/13/94 3660 4.68
5/12/94 3653 4.51
5/11/94 3629 4.88
5/10/94 3656 4.83
5/9/94 3629 5.09
5/6/94 3670 4.62
5/5/94 3696 4.69
5/4/94 3698 4.51
5/3/94 3714 4.50
5/2/94 3701 4.22
4/29/94 3682 4.74
4/28/94 3668 4.59
4/26/94 3700 4.73
4/25/94 3706 4.56
4/22/94 3649 4.70
4/21/94 3653 4.37
4/20/94 3599 4.45
4/19/94 3620 4.39
4/18/94 3620 4.68
4/15/94 3661 4.49
4/14/94 3663 4.82
4/13/94 3661 4.99
4/12/94 3682 5.05
4/11/94 3689 4.40
4/8/94 3674 4.78
4/7/94 3693 4.25
4/6/94 3680 4.25
4/5/94 3675 5.15
4/4/94 3593 5.51
3/31/94 3636 5.69
3/30/94 3627 5.91
3/29/94 3699 6.09
3/28/94 3762 4.96
3/25/94 3775 4.91
3/24/94 3821 4.69
3/23/94 3869 4.53
3/22/94 3863 4.12
3/21/94 3865 4.25
3/18/94 3896 4.14
3/17/94 3865 3.75
3/16/94 3848 3.67
3/15/94 3850 3.84
3/14/94 3863 3.90
3/11/94 3863 4.14
3/10/94 3831 4.27
3/9/94 3853 4.49
3/8/94 3852 4.35
3/7/94 3856 4.51
3/4/94 3832 4.63
3/3/94 3824 4.60
3/2/94 3832 4.74
3/1/94 3809 4.81
2/28/94 3832 4.16
2/25/94 3839 4.14
2/24/94 3840 4.44
2/23/94 3892 4.63
2/22/94 3912 4.58
2/18/94 3887 5.08
2/17/94 3923 4.79
2/16/94 3937 5.03
2/15/94 3928 4.78
2/14/94 3904 5.25
2/11/94 3895 4.85
2/10/94 3895 6.48 |
