In 1967, a technical analyst named Richard W. Arms invented the Arms Index. Later, this same statistic became known as TRIN — or Short-Term TRading INdex. No matter what you want to call it, Arms/TRIN is a great indicator to have in your arsenal.
Basically, TRIN can be applied to the NYSE or Nasdaq, and is used to gauge broad-market sentiment for short-term trading. Adding a 10-day SMA can smooth out some of TRIN’s inherent volatility and make it more useful for slightly longer-term scenarios. But I’m getting a bit ahead of myself…
In this episode, you’ll learn:
- About the Advance-Decline Ratio and the Advance-Decline Volume Ratio, which are the two statistics used to calculate the Arms Index/TRIN.
- How to interpret the Arms Index/TRIN — both the standard, ultra-short term; and the smoothed-out, slightly longer-term version.
- How to use Arms Index/TRIN at StockCharts.com — including a list of ticker symbols for each exchange’s TRIN.
We also include a pair of example charts that help more clearly demonstrate how to use Arms Index/TRIN — and instructions on more advanced interpretations of the indicator.
Arms Index/TRIN can help you determine if the broad market is oversold or overbought, as well as if the market is showing general strength or weakness. Yes, there are several other indicators out there that do the same thing, but that doesn’t mean TRIN isn’t valuable. With this episode, you can see for yourself!
CEO, Wealthpire Inc.