A market-wide thermometer that divides the ratio of advancing to declining issues by the ratio of their volume. Behind the single number lies whether the crowd is committing real money to the buy side or the sell side.
TRIN (the Trading Index) was devised by Richard Arms in 1967. After its creator it is also known as the Arms Index.
Its starting point is what sets it apart: it is calculated on a whole market (the NYSE, the NASDAQ, and so on), not on a single stock.
It measures one thing only: whether the ratio of advancing to declining issues is in balance with the ratio of the volume flowing into each side.
When the headcount favors the advancers but the volume piles into the decliners, that mismatch pushes TRIN away from 1 and translates the tension inside the market into a single number.
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