Using the Short-Term Trading Index (TRIN) to call market bottoms:

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). It is used to gauge overall market sentiment.

 

The rule is if TRIN closes above 3.00, after an extended decline, then three business day later, expect a bottom. However, if it goes over 3.00 on an initial sell off, then it is a sign that there is more pain to come, as occurred on December 4, 2018.

Where are we now?

Not quite at 3 yet (would signal we are in oversold territory), TRIN had a very 'disciplined' selling this week : above 1.00 but below 2.00 for most of the week meant there was little panic - just focused deliberate risk reduction.

So currently the TRIN is telling us the market is still trending down and has room to go.

TRIN did not see over 3.00 (high of only 2.25 last week) - an essential requirement for a reversal signal has yet to appear. Keep an eye on it and trade safe!

Produced in partnership with The Bear Traps Report / Bastien Chenivesse