TRIN Arms Index Daily Chart

The TRIN at 1.00 is a neutral reading where neither bulls nor bears dominate the daily action. When the TRIN moves above 2, 3, and higher, the selling is way overdone, the bearishness is off the charts. Conversely, when the TRIN drops under 0.50 the bullishness is at euphoric levels, the sub 0.25 levels over the last two days is astronomical bullishness.

The green circles highlight key market lows over the last half-year while the red circles highlight tops.  Interestingly, the late July market top (shown by the 0.25 TRIN) occurred after the two-day market bounce after Draghi said he would support the euro by all means necessary, the key turning point event in markets in 2012. The SPX jumped from 1330 to 1390, 60 points, when Draghi made the announcement, saving the markets from the bearish green circle in July, then gave back half of that in the following days before then beginning the rally up move into the September top. Using this fractal behavior, the markets just had a two-day pop, just like in July, on positive news, just like July, the move was strong about 60 points, just like July.  If the same outcome occurs, then the SPX would pull back to the 1420's in the days ahead.

At any rate, the TRIN is at more uber bullish levels than it was at when the September triple top occurred.  A move similar to the October-November selloff cannot be ruled out and is in fact projected by the current low TRIN behavior.  At a minimum, a pull back of 20 or 30 SPX handles would be projected, say, by the middle of the next week. 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.