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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: Richard Estes who wrote (1570)	12/7/1997 1:52:00 AM
From: Joe W.	Read Replies (1) \| Respond to of 12617

Richard.. I would appreciate your opinoin on this TRIN THRUST - one of our very best market timing tools. The volatility in the markets in the last few months has caused us to put more attention than usual on predictng short-term market direction. One of the best tools to do this, and a simple one to use, is the TRIN or "Arms Index" named for its discoverer, Dick Arms. The TRIN is the NYSE "Short-Term Trading Index. It is found on every market monitor screen. It measures a combination of the number of advances and declines on the NYSE and relates those totals to the up-and-down volume activity in the stocks. Wall Street views extended periods above 1.00 as an indication of a weak market and extended periods below 1.00 as indicating a strong market. The TRIN THRUST Strategy does not look at the readings in this way. It simply looks at the raw daily change to predict market action for the next two trading days. As far as the "traditional" way of interpreting the TRIN, none of the testing done by OceanView Financial Research has shown that extended readings above or below certain levels can predict a market reversal on a timely basis. CONCEPT BEHIND TRIN THRUST We know that the majority of the time, the market moves to an area that is overbought and remains that way until forces pull it to oversold territory. For this change in direction to take place the market's momentum needs to be stopped and reversed. Taking these pieces into consideration, and recognizing that the TRIN does a good job of signaling that a market has been strong or weak, we have found that sharp one-day reversals (thrusts) off the TRIN are often the beginning of a two- to three-day market reversal. Note again, we are not measuring the absolute value of the TRIN, but instead comparing one day's close with the next. A sharp change in the TRIN reading is indicative of a momentum change and this new momentum surge takes approximately two days to run its course. Here are the very simple rules: FOR BUYS 1- If today's closing TRIN is .30 or more BELOW yesterday's closing TRIN, buy the market on the close today. 2- Sell two trading days later. FOR SELLS 1- If today's closing TRIN is .30 or more ABOVE yesterday's closing TRIN, sell the market on the close today. 2- Close the position two trading days later. WHY IT WORKS: A .30 daily change in the TRIN is significant and means the momentum is beginning to change. One an also use a change of .35, .40 , .45, .50 etc. which also show positive results, but the higher the number, the fewer trades signaled. RESULTS: Tests using the S&P future for just over six years, from Jan. 1990 through August 1997 showed a net profit of $ 221,850. One contract - slpiiagea nd commission not included. The percent of profitable trades was 56%. "What, only 56% correct?" In trading and edge is an edge is an edge. Look at the profit figure again. That "mere" six percent edge lead to an average profit of $ 33,000 per year. There is a very good way to trade this strategy SELLING OEX options. In the first seven and a half months of 1997 it returned 37 1/4 OEX points on 64% winning trades. Look for more on this OEX/TRIN THRUST in a future copy of the zine.