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Digging Deeper



I would like to respond to all the emails Toddo and I have received regarding the performance of the market directly after the NYSE TRIN indicator (originated by my good friend Dick Arms) closes over 3 - good spot and work Jason. As pointed out by Jason, since 1998, I too found nine instances of a NYSE TRIN reading over 3. Each instance was followed by a positive session in the Dow Jones Industrial Average.

On the surface, that is a no-brainer trade and very well may be. Underneath the surface I am not so sure. Each prior reading over 3 that had a meaningful gain came from deeply oversold territory and a dramatic down move. Yesterday was not a good day, but it certainly couldn't be characterized as overly dramatic and the market is certainly not oversold on the daily charts.

Table 1 - What happens when the NYSE TRIN closes over 3?

Day After
Date Price Drop % Drop % Gain

1/9/98 -222 -2.85 0.88
8/31/98 -512 -6.37 3.82
4/14/00 -618 -5.66 2.69
3/12/01 -436 -4.10 0.81
4/3/01 -292 -2.99 0.31
1/29/02 -247 -2.55 1.50
4/11/02 -206 -1.98 0.14
9/3/02 -355 -4.10 1.40
12/27/02 -128 -1.53 0.35

Average -335 -3.57% 1.32%

As you can see by the above table, the greater the drop on the day of a reading over 3, the better the next day. Hopefully, eyeballing it yourself gets you the information you need.

Great research normally comes from great observations. Thanks Jason
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