Monday, May 24, 2010

Markets and how they work

Please see the above image and we will discuss this further. The above chart shows Trin/arms index (Black line) and S&P 500 (Red line)

From -
Trin/Arms Index

As a ratio of two indicators, the Arms Index reflects the relationship between the AD Ratio and the AD Volume Ratio. The TRIN is below 1 when the AD Volume Ratio is greater than the AD Ratio and above 1 when the AD Volume Ratio is less than the AD Ratio. Low readings, below 1, show relative strength in the AD Volume Ratio. High readings, above 1, show relative weakness in the AD Volume Ratio. In general, strong market advances are accompanied by relatively low TRIN readings because up volume overwhelms down volume to produce a relative high AD Volume Ratio. This is why the TRIN appears to move "inverse" to the market. A strong up day in the market usually pushes the Arms Index lower, while a strong down day pushes the Arms Index higher.
So as you can see above, BOTH SPX and TRIN have been moving up as siblings. And you call folks at Zerohedge conspiracy theorists from outer planet?

As they say in LV, Place your bets.


Update around 11:20AM.

Welcome to Palazzo, LV. :-)

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