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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: JOED3 who wrote (68959)	1/29/2000 2:34:00 PM
From: Walk Softly	Respond to of 108040

Traders Index (TRIN) This from AIQ ( my stat package) also a comprehensive look at all indicators "The Encyclopedia of Technical Market Indicators" by RW Colby abd TA Meyers (the bible, but very discouraging).. Meyers used a very harsh pure math model to get something out of TRIN... he failed... TRIN is best used the way AIQ uses it in graphical representation.... it clearly signals when bottoms and top reversals are iminient.... TRIN actually reached a stunning 406 on 10/26/87....... Note The Traders Index can be displayed only on charts of market type tickers. An indicator developed by Richard Arms, the Traders Index (TRIN) is the ratio of advancing issues versus declining issues divided by the ratio of advancing volume versus declining volume. It is a measure of the breadth of the participation in the market. A value of 100 for this indicator means that the market trend is moving in a balanced way. That is, the up volume for the day is about equally distributed over advancing issues; and the down volume for the day is equally distributed over declining issues. This balance can occur in an uptrending market, downtrending market, or lateral market. It simply means that the entire market is participating in whatever direction the market is moving. When the Traders Index moves away from 100, it indicates that the market is moving into an unbalanced condition, signaling a possible change in direction. As the value of the Traders Index decreases below 100, it is an indication that volume is distributed over fewer and fewer issues and it is a signal of a market top. It means that fewer issues have sufficient perceived value to attract buyers -- more and more issues are fairly valued or overvalued, and fewer issues are undervalued sufficiently to attract buyers. The market is unbalanced on the high side, and a market top is signaled. When the value of the Traders Index is greater than 100, it again signals that volume is moving in fewer securities, but this time on the down side. Fewer issues are perceived to be overvalued, and thus fewer are available for sale. As fewer issues are being offered for sale at current prices, prices tend to stabilize and a market bottom is signaled. The Traders Index is computed as an exponentially smoothed average with a smoothing factor of 18%. Empirically, it has been determined that 75 or lower indicates a market top, and 120 or higher indicates a market bottom. Compared to other indicators of this type, the Traders Index is upside-down. From an engineer's point of view, it probably should be flipped over. Historically, however, this is the way the Traders Index has been displayed and AIQ will continue with the convention. On the Traders Index plot, the upper horizontal line is 120 and the lower horizontal line is 75. These numbers are, historically, good dividing points for signals. The 120 line indicates an oversold condition and the 75 line indicates an overbought condition. When the Traders Index is at either line, a trading opportunity is signaled. Look for the number of days that the Traders Index remains at one or the other of the extreme values. The Traders Index tends to be a leading indicator, sometimes giving a signal two or three weeks prior to the actual market turnaround. Also, there are times in extremely trending markets when the indicator will give false signals. Value shown in Control Panel The value shown is the value of the Traders Index for the date specified. Changeable constants The time period used to compute the average may be changed. The default value is 10 days and permissible range is 1 to 60 days. The default value of 10 days is standard among technical analysts, and is the number of days strongly recommended by Richard Arms.

To: JOED3 who wrote (68959)	1/30/2000 6:14:00 PM
From: Walk Softly	Read Replies (1) \| Respond to of 108040

Joe.... in the unusual situation where the ratio of advancing issues to declining issues is > the ratio of + volume to - volume... it can only mean there is a dispropotionate high amount of - volume for the amount of issues that are going down... or that - volume is concentrating in fewer issue.... looking at this as a measure of breadth, it is the converse of alot of + volume being concentrated on fewer advancers.... this is the reverse argument to a narrow advance... i.e. we are seeing a narrowing retreat (a retreat concentrated over fewer issues)... which humourously is bearish for the bears.... this is what TRIN is now telling us.... how extreme this condition becomes depends on the panic level in the marketplace..... the fact that it became extreme so fast portends an iminent reversal.... IMO.... unless of course panic accellerates...... I ask, based on what?.... there just isn't any justifiable uncertaintly in the market right now.... maybe this is scarry???.... I believe this is the last test of the 200 DMA before the Dow breaks out of this last 12 month range for good.... This doesn't mean the Dow can't edge lower, only that the breadth of the retreat is narrowing, losing bredth/momo and sure as shooting must correct to the upside....