TRIN measures the concentration of volume in advancing and declining stocks. It is
also called the Arms Index, (after its creator, Dick Arms). Think of it as the
market's "gas pedal". If the TRIN is falling, buying is coming into the market.
Someone is stepping on the market's "gas pedal".
The trend of the TRIN is more important than the absolute level of the TRIN.
However, if the TRIN is able to register a low reading, less than .60 going into the
second half of the day, this is quite bullish. If the TRIN registers a reading greater
than 1.25 after lunchtime, this is quite bearish.
Never go home short a TRIN reading less than .50. There are approximately 85%
odds the market will be higher the next morning. In the first 1/2hour, the TRIN can
jump around if there is a large stock trading close to unchanged. As volume
increases for the day, the TRIN will stabilize.
The TRIN is a coincidental indicator with the S&P. Its main value is qualifying the
overall tone for the market. An increase or decrease in the TRIN reading reflects
strong buying or heavy selling. The trend of the TRIN is what is most important.
Watching this helps smooth out some of the noise in the S&P price and confirm
Afternoon TRIN Lead trade:
There is a time period where the TRIN sometimes leads the market. Around 2:00
PIVI (EST) in the afternoon, it can display a 5-10 minute leading function by
indicating a change in buying or selling pressure before the S&P starts to move.
This is quiet buying/selling by the smart
So, if you see the TRIN dropping like this: 86 ... 84 ... 82 ... in the afternoon and the
S&P's are going sideways, there are extremely high odds a good afternoon rally is
about to take place.
Ticks indicate how much buying/selling power is stored up. If there is a large
"uptick" reading, a majority of stocks are being bought on balance.
Ticks must be watched with respect for the overall tone of the market. They are can
be used in a countertrend manner by looking to fade the extreme readings when in a trading range. They can also be used in trending markets to enter on retracements in
the direction of the trend.
For example, if the market is in a steady uptrend and there has been a burst of
buying activity which drives the plus ticks to +600, watch for the ticks to retrace
back towards zero as a buying opportunity.
In a normal sideways trading environment, +500 and -500 tend to be
overbought/oversold levels. Ticks trade in an approximate 1200 tick range, so if the
market has been in a down- trending environment, and the tick readings fluctuate
around -1000, then +200 will be "overbought" or represent the upper end of the
Ticks should be watched in conjunction with the "Tiki's", (or "Ticki's" on some
data feeds). This reading is the net number of Dow stocks on an up-tick or downtick. In general, overbought/oversold range is +24 to -24. If the Tick reading
is +500 but the Tiki's only register +12, there will probably be another surge up.
The implication is that the trading programs have not fully kicked in yet. The
programs almost always cause the Tiki's to reach +/ 22 to 26.
Ticks also function as a confirmation/non-confirmation indicator. If the market
makes a new high, the ticks should make a new high. When this occurs,
retracements can be traded in the direction of the trend. However, if the price
makes a new high and the ticks do not, a reversal is likely. Always remember, in a
strongly trending environment, ticks and momentum based indicators or oscillators,
will have a tendency to give premature false readings, so be sure and assess the
degree of trend in the market before using these indicators.
Since the market alternates between a trending and a consolidation mode, the day
following a trend day or wide range day tends to be a particularly good one for
using the ticks in a countertrend mode.
* Ticks can also be used to confirm the opening in the S&Ps. If the S&Ps have a
large opening gap up, and the ticks have a high reading, thus confirming the move,
there should be continuation in the direction of the gap.
If Ticks reach an extreme reading one day, it indicates a trend day. There are good
odds for a bit more follow-through the next morning on a day where the ticks hit
+/- 1000 in the afternoon. Once again, the following day should see a lesser reading
in the tick extremes before the trend turns.
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TRINinstruments are available in NT7 as well as in NT8 IF YOU HAVE A DATAFEED THAT PROVIDES THEM such as Kinetick or DTN. You might have to add them manually to your instrument list.
Then you need an indicator that inverts the logarithm of the TRIN. At that point you can apply oscillators to it.
I personally wouldn't bother. I don't even think that Barry Taylor uses it that much anymore.
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