So far today is as negative as it appeared to be heading into the opening bell. It seems like every headline is negative and that clearly sets the stage for a contrary opinion. Earlier I pinged Toddo about a proprietary indicator I use that looks at the internals of the market that suggest a contrarian point of view for a day - but that is about it.
Over the past three-year bear market, anytime the NYSE TRIN indicator is above 2 for two consecutive days, the next day has seen a marginal gain in the S&P 500. If the market closed where it is now, today would represent the second day.
Does that mean the worst is behind us. In terms of tomorrow's activity (again assuming that the TRIN closes above 2) it may from a day trading standpoint. TRADING IS ABSOLUTELY NOT MY FORTE.
What I found interesting was that this was more indicative of the worst being just ahead of us vs. just behind us. As I said, each signal was greeted by a marginal gain directly after - but that marginal gain was followed by major pain. The dates I have for the second day in a row with a TRIN over 2 are:
If you look at the day after each date, you will find a small gain was forthcoming in the S&P 500, but you will also notice that none of them corresponded to an intermediate-term low. They all were leading to the final leg in creating one though and that is why I continue to look for evidence of the proper entry point. Again, all of this will have zero meaning if the NYSE TRIN doesn't close above 2.
ps. If you want to learn more about the TRIN indicator, it is also called the ARMS Index and my friend Dick Arms has dones some fantastic work on it.
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