Question

Which of the 3 days would be considered the most​ bullish? Explain why. ​(Select the best choice​ below.)


A. More stocks rose than fell on all three days. Hence the numerator is always greater than 1.0.
B. Higher TRIN values are interpreted as being bad for the​ market, because even though more stocks rose than​ fell, the trading volume in the falling stocks was greater.
C. On day​ 2, the volume of declining issues exceeded the volume of increasing​ issues, resulting in a denominator that was less than 1.0.
D. All of the above statements are correct.

Answer 1

Complete Question

Compute the Arms index or TRIN over the following three days (refer to table at the bottom):  

1. Which of the three days would be considered the mostbullish? Explain why.  

Data Table:  

Day 1

Number of Stocks Rising in Price = 350  

Number of Stocks Falling in Price = 150

Volume for Stocks Rising =850 million shares

Volume for Stocks Falling in Price = 420 million shares

Day 2

Number of Stocks Rising in Price = 275

Number of Stocks Falling in Price = 225

Volume for Stocks Rising =450 million shares

Volume for Stocks Falling in Price = 725 million shares

Day 3

Number of Stocks Rising in Price = 260  

Number of Stocks Falling in Price = 240

Volume for Stocks Rising =850 million shares

Volume for Stocks Falling in Price = 420 million shares

Answer:

Option D) All of the above statements are correct

Explanation:

The Trading Index (TRIN) is a technical analysis indicator that compares the number of advancing and declining stocks (AD Ratio) to advancing and declining volume (AD volume).

$TRIN = \frac{Number of stock rising in price}{Number of stock falling in price} *\frac{Volume of stock falling in price}{volume of stock rising in price}$

TRIN for day 1

$TRIN$$=\frac{350}{150} * \frac{420,000,000}{850,000,000}$

$TRIN = 1.15$

TRIN for day 2

$TRIN = \frac{275}{225} *\frac{725,000,000}{450,000,000}\\ TRIN = 1.97$

TRIN for day 3

$TRIN = \frac{260}{240} *\frac{420,000,000}{850,000,000}\\ TRIN = 0.54$

• It is obvious that for all the three days, number of stocks rising in price exceeds number of stocks falling in price, the ratio is then greater than 1. Therefore, option A is correct.
• The higher the TRIN value, the greater the trading volume for the falling stock. Day 3 has the highest TRIN value of 1.97 and also the highest down volume of 725 million shares. Therefore, option B is correct.
• Option C is correct because, the volume of stock rising in price which is equal to 450 million shares is lower than the volume of stock falling in price which is 725 million shares. The ratio of up volume to down volume is therefore less than 1
• All the options are correct

Answer 2

Answer:

The correct answer is  B.                          

Explanation:

The Short-Term Trading Index (TRIN) is a technical analysis indicator that compares the number of advancing and declining stocks (AD Ratio) to advancing and declining volume (AD volume).

When a TRIN reads above one, it typically accompanies a strong price decline, since the strong volume in the decliners helps fuel the selloff.

Cheers!