What is the Arms Index (Trin)?
The Armsmarket is deeply overbought or oversold.(Trin) uses the ratio of advancing issues to declining issues to signal when the
How Does the Arms Index (Trin) Work?
The ArmsIndex."is named after its designer, Richard Arms. It is also known as "Trin," which stands for the "Trading
The Arms Index compares the relation of advancing issues to declining issues (stocks up at least a penny on the day versus stocks that have declined at least a penny) as well as the relation of advancing volume to the declining volume (the total volume of all stocks that closed higher on the day versus the total volume of all stocks that closed lower).
It is calculated using the following formula =
(Advancing / Declining Issues) / (Advancing / Declining Volume)
To calculate the Arms Index, we will use the figures for all trading on the NYSE on a specific day:
Advancing Issues: 783
Declining Issues: 2542
Up Volume: 254 million shares
Down Volume: 1,612 million shares
Using the above formula, the calculation would go as follows:
Advancing/Declining Issues: 783/2542 = 0.371
Advancing/Declining Volume: 254/1612 = 0.157
Arms Index Calculation: .371/.157 = 2.35
The Arms heavy selling pressure in stocks that moved lower.for the above day was 2.35. 2.35 tells us that far more volume went into the stocks that were declining than into stocks that were advancing. If the two ratios had been proportionate, then the Arms would have come in at 1.0. An Arms reading of 2.35 indicates that on this day there was very
Since individual daily readings can be quite volatile, the Arms moving average plotted on a scale. When this 10-day moving average falls below 0.80, the market is considered to be overbought. When the moving average reaches 1.20, the market is said to be oversold. The Arms tends to remain in this 0.80 to 1.20 range the majority of the time.is generally displayed as a 10-day simple
You'll usually find the Arms New York Stock Exchange (NYSE) Index. Since that contains every stock listed on the exchange, it is seen as the best proxy for that overall market. (You can also calculate an Arms for any other market, such as the Nasdaq Composite.)plotted alongside the
Why Does the Arms Index (Trin) Matter?
An Arms bullish sentiment, and a value above 1 is bearish. The was introduced by Richard Arms, and is continuously displayed during trading hours, among other indices, on the New York Stock Exchange's central wall display for the stocks traded on that exchange.value below 1 usually indicates
Stochastics and RSI are generally the most common measures of overbought and oversold. Both indicators are based on a stock's price in relation to its own trading range. The Arms is based on the overall performance of the market itself, more specifically, its breadth and volume.
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