The Arms Index compares the number of advancing and declining stocks with the volume flowing into them. A reading near 1 means volume is spread evenly; below 1, advancing stocks attract more than their share of volume, and above 1, declining stocks do. Many traders read it as a contrarian indicator: a spike well above 1 shows panic selling that often appears near short-term bottoms, while a very low reading shows exuberant buying that can precede a pullback. Because daily values are noisy, a 10-day moving average of the Arms Index is often used to judge overbought and oversold conditions.
The charts above show the Arms Index under the price of 24 stock indexes, from the S&P 500, Nasdaq 100 and Russell 2000 to the FTSE 100, DAX and Nifty 50, so you can compare breadth across markets at a glance. Click a chart to open a larger version.
The Arms Index, also called TRIN (Short-Term Trading Index), is a market breadth indicator developed by Richard Arms. It compares the advance/decline ratio with the up/down volume ratio of an index.
Divide the number of advancing stocks by the number of declining stocks, then divide the result by the volume of advancing stocks divided by the volume of declining stocks.
A TRIN below 1 is bullish because advancing stocks receive more than their share of volume, and a TRIN above 1 is bearish. Readings below 0.5 or above 2 are extremes that often come before a reversal.
A very high TRIN shows heavy, one-sided selling. Such panic often exhausts sellers, so traders who read the index as a contrarian indicator see it as a sign that a short-term bottom may be near.
Yes. In the Formula Screener, trin is the Arms Index. For example, (trin < 1)@nyse and price ca sma(50) finds stocks crossing above their 50-day SMA while NYSE breadth is bullish.
