TRIN Arms Index Daily Chart

The uber multi-month low in the TRIN firmly verifies the market advancers far outpacing the decliners. When the stock market is joyous and trading higher, the TRIN drops. A TRIN in the 0.8-ish area represents steady-eddy buying that may continue. Once the TRIN continue slower under 0.7, the buying is off-the-charts and out of hand. A mean reversion back to the sell side is desperately needed. The TRIN collapses to 0.49 verifying the market euphoria and extreme bullishness.

When stocks sell off, the TRIN rises. A TRIN around 0.8 to 1.0 is steady-eddy selling that may continue. When the TRIN moves above 1.2, the selling event turns into panic. If the Trin spikes far higher to 1.5, 2, 3 and higher, that represents blood in the streets with traders jumping out of windows; hopefully they are on the first floor. The panic is a great buying opportunity to go long stocks.

Now, however, we are on the opposite side of the spectrum in the uber bull euphoria area so some selling in equities would be expected going forward.

Another useful tool is the 10 MA for the TRIN. The 0.8-ish level (0.80-0.85), where the blue line is at now, represents robust bullishness in the stock market and a mean reversion lower in equities would be expected. When the 10 MA sneaks up towards 1.2 (1.1-1.2) that is a buy signal for stocks since negativity will be too ingrained in the market pysche. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.