TRIN Arms Index SPX Daily Charts

The TRIN collapsed to 0.31 after the opening bell Friday morning verifying the uber bullishness and euphoric stock market sentiment. There are no bears remaining; everyone is bullish. The TRIN closes at 0.90 but the uber low 0.31 print is more important. As the 0.31 printed that marked the exact top in stocks shortly after the opening bell on Friday. The Arms Index is a contrarian indicator. 1.00 is the neutral line. Bulls are in control of markets below one and bears are in control above one. When the TRIN moves too high especially at, near or above 2.00, folks are panicking and worrying about a continued market selling event. Instead, the stock market will bottom and a rally will begin. This is because traders are too pessimistic. When the TRIN collapses under 0.60 and lower, the bullish euphoria is off the charts and stocks will top out and sell off, like Friday. This is because traders are too optimistic.

You want to be nibbling long at 1.6-1.8 and higher and become far more bullish above 2.00. You want to be nibbling short under 0.7 and lower and become far more bearish below 0.60. The green and red circles ebb and flow like the waves on the ocean, crests and valleys, peaks and bottoms. With the uber low 0.31 print occurring on Friday, what do you think will happen going forward? 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.