TRIN Arms Index and SPX 5-Minute Charts Using TRIN to Identify Intraday Turns

The broad markets meander sideways all day, same-o stuff.  Keystone often references the TRIN during trading hours so let's review the TRIN today against the SPX. To quickly review, the TRIN 1.00 level is the neutral level, think of it as the bull-bear line in the sand. If the TRIN moves higher from 1.00, to 1.10, and 1.20, etc..., the broad market selling is increasing. If the TRIN starts running obscenely higher to 2, 3, 4, and sometimes much higher to 9, or 10, that signals uber bearishness and the markets will likely rebound the next day. Conversely, if the TRIN drops under 1.00 and heads lower to 0.9 and 0.8, the market bulls are in full control with the buyers taking the broad indexes higher. If the TRIN drops to an obscenely low number like 0.50, 0.40 and even lower, that signals uber bullishness and an overextended market upside that needs a pull back.

The 5-minute chart shows the TRIN running obscenely lower into the Thursday evening close, down to 0.5-ish. This morning the SPX played catch-up and popped out of the gate to satisfy the low TRIN, however, the TRIN rocket-launched at the open to 1.5 showing that the market bears should be in control. Therefore, the SPX fell on its sword and dropped lower to print the lows early in the session in the red circle.  Everything was going good for the bears but then shortly before 11 AM note the TRIN leaking lower, and lower, straight down into lunch time. The green dot at 12:30 PM is interesting since the TRIN has dropped a lot, now at 0.8-ish but the SPX is sitting at 1519-1521.  As a trader, you know the TRIN is telling you that the SPX should be several handles higher to catch up to the TRIN, and, sure enough, by 1:30 PM, the SPX had jumped to 1524.

The second dot in both charts shows how the TRIN placed another low at 1:30 PM which says the SPX needs to keep printing highs, which it did with the 1524, however, the third dot shows the TRIN starting to make its way higher once again. So a few minutes after 2 PM, with the higher TRIN, the SPX should start to pull back, but, lo and behold, the SPX places another high at 1525. The TRIN continues higher so as a professional trader you know that the SPX will come back down, and it does. Seeing that high in the SPX when the TRIN was moving back up would save you from entering a long trade since you know the markets are about to pull back, and 80% of the stocks move with the broad index. The TRIN climbed into the close and ended at 1.08, a hair bearish. The SPX realy gave up the ghost collapsing in the final ten minutes. This likley had more to do with the rebalancing where stocks were dumped but others will likely require purchasing tomorrow morning. Note how the TRIN leads by a hair, so if you are a day trader or trading short term, or timing entries and exits, you can see hte importance of the TRIN. If you are a day trader the TRIN and TICK must be constantly streaming in one of your windows. 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.