Phew, the storm has passed…
Posted By Mike On Aug 13, 2009 @ 2:58 pm In social mood, technicals | 8 Comments
5-year view of positive-only maximum values for the NYSE TRIN* here:
[1] 
Interactive Brokers
Boy, that squall just came out of nowhere, didn’t it? Thank god it’s behind us… looks like smooth sailing from here on.
I thought it was kind of neat to see this faulty, positive-only TRIN chart, since it highlights the really bad days. Here’s the complete picture of daily TRIN readings (3 years):
[2] 
Stockcharts.com
Notice the symetry that forms over time: action and reaction. This picture is looking pretty lopsided at the moment, reflecting a very highly overbought market.
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*TRIN is a measure of breadth, useful for gauging the intensity of advances and declines.
Formula: (Advancing Issues / Declining Issues) / (Advancing Volume / Declining Volume)
When lots of stocks move together and volume picks up in the direction of the movement, you get a strong TRIN reading and you know that the movement could be more than just noise. Moving averages help you to identify overbought and oversold conditions.
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TICK
TICK* is usually considered a day-trader’s tool, but its longer-term moving averages are very information rich. It is a tool that would have helped keep you on the right side of the market for the last 24 months:
[3] 
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Look at how useful the MACD has been. Very nice pattern here since the start of the bear market. From an overbought condition it gives a sell signal on a downward cross of the zero line. Once that is followed by a countervailing move large enough to reset momentum, the return to the zero line gives the signal to tighten up stops and a cross with gusto gives a buy signal.
Right now we’re at the zero and pointed down.
*TICK: Downticking stocks (hitting bid) minus upticking stocks (hitting ask) on the exchange at a given moment.
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