augieboo's junk pile

[augieboo]

WARPFACTOR ON TRIN IN SHORT TERM TRADING

I really don't know of anyone who uses TRINQ to any productive end. But many use the TRIN religiously. Some of us were discussing the current state of TRIN over on SI recently. Typically, when TRIN exceeds 2.0 for 2 consecutive days, I use it as a ST buy indicator - very effectively I must say. I also use some rules for TRIN exceeding 3.0 and 4.0 as well. Historically, when the 5-day total exceeds 9.0 or the 10 DMA exceeds 1.5, this has portended a great intermediate length rally. The 10DMA has recently pegged 1.70, a near record high. The 5DMA, not sure we've quite made it to 9.0, but it was in the 8s a few times.

However, lately the current TRINs have been muddling around pretty low levels - today only 1.44 despite the viscious selloff. Some are taking these low TRINs to mean that reversal is still off in the distance, because "panic" dumping of selective high-beta stocks is not happening.

I have a different theory. We already had the selective panic dump stage, where investors threw out their "riskier" stuff and hung onto the blue chips. Now we are in a liquidation phase where J6P has given up and is bailing out of index funds. Since the ratio of shares up/shares down, and the ratio of volume up/volume down is now similar, the TRIN stays low. This type of selling is across the board - index funds do not pick and choose. Everything must go! Babies out with the bathwater!

Is this just a stupid theory that I concocted to mentally support my holding of tech longs??

Here is data from last Sept. The righthand column being the close. As you can see, TRIN never got very high, even into the teeth of the post Sept 11 selloff.

 
 Date       Open   High  Low   Close 
 ===================================== 
 28-Sep-01  0.09   0.99  0.09  0.71 
 27-Sep-01  1.13   1.57  0.92  0.94 
 26-Sep-01  0.76   2.05  0.59  1.69 
 25-Sep-01  1.31   1.62  0.62  0.96 
 24-Sep-01  0.16   0.62  0.16  0.55 
 21-Sep-01 12.38  13.88  0.33  0.7 
 20-Sep-01  2.01   2.98  0.75  1.18 
 19-Sep-01  0.46   1.85  0.46  0.89 
 18-Sep-01  0.58   1.15  0.55  1.14 
 17-Sep-01  0.99   2.42  0.88  1.37 
 10-Sep-01  4.71   4.71  0.44  0.68  
  
 

Any thoughts or comments?? Do we need to have Intraday TRIN at 5.0 to call a bottom??

Warp

(:

augie