We saw the $TRIN (Arms Index) spike up above 2.20 today, and were wondering about the predictive value of a very high $TRIN reading over the very short term. Just to review, this is the Advance/Decline ratio divided by the Up Vol/Down Vol ratio on the NYSE. The idea is that you can check whether the volume under the hood matches the headline ratio of stocks advancing to those declining. When the relationship between volume and price action gets stretched,…
So, uh, we have some LEAP options that are older than those Chinese gymnasts. The word on the street is that they would’ve done even better this week, but some of them are still teething.
The NYSE $TRIN is around 1.30, a level we haven’t seen since July 29. For context, TRIN readings of 2.00 (0.75) are generally considered to denote oversold (overbought) conditions. TRIN pushed above 2.00 on that date back in July, and the markets moved significantly higher…
The short-term bottom that formed on July 17 and the rally the following day were marked by incredible volume and by a convincing breadth reversal. Since then, volume has trailed off quite a bit (as you would expect). More importantly, even though the indexes have rallied up this morning off of their premarket lows, breadth has turned quiet negative, and the $TRIN, $TICK, and put/call readings are all flat-to-uninspiring.
We suppose the key question here is whether the markets will…
Monday, August 25, 2008
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