The TRIN Early Warning Siren

Bespoke uses the TRIN (TRading INdex, aka Arms Index) to show extremes in selling or buying. The TRIN formula is deceptively simply and forecasts distribution of stocks:

• Near 1 is balance
• Above 1 is a rollover into selling
• Below 1 is a rollover into buying

As it spikes up or down it also measures the buying or selling pressure it takes to move the market. As Dick Arms interprets: 

The Index seems to work most effectively as an overbought/oversold indicator. When the indicator drops to extremely overbought levels, it is foretelling a selling opportunity. When it rises to extremely oversold levels, a buying opportunity is approaching.

The recent spike above 13 shows it took a lot of selling to move the market down. This can signal exhaustion of a trend and a buying opportunity if it comes at a bottom, but can be used as an early warning signal if it comes in the middle. Bespoke smoothes the TRIN to a 10-day average to take out noise, and came up with this stunning warning shot across the bow: the TRIN spiked in March 2007, signaling the coming credit crisis:

 

It may be signaling the second wave of that crisis is ahead.  

Comments

[Mamma Boom Boom]

LOVE IT. Gotta keep'em bearish.

[Roger D.]

Now what comes first the USD or the Dow?

http://www.screencast.com/users/parisgnome/folders/Default/media/9dbba5bd-d09c-4a4d-8649-75cbc0b5d2f1

Roger D.

[Profesor Linguist]

Dow would come first unless you're using a reverse dictionary in which case USD would come first.

Now if you go with Dow vs Dollar then Dollar would come first in a normal dictionary or last if you were to use a reverse dictionary.

Hope that helps to clarify it.

Cheers

[Roger D.]

Once a linguist always a linquist.

[Profesor Linguist]

NYUK NYUK NYUK :-)

[Biased]

run that same average in October 1997 and what do you get, bupkiss, or something like it.
recency bias!

[Profesor Linguist]

bupkiss? recency?

May I interest you in a reverse dictionary Mr Biased?

[Mamma Boom Boom]

Exchange rates are probably about to become a non-issue.

http://www.imagebam.com/image/cf7ea783884080

[Chief Rugburn]

Exchange rates are probably about to become a non-issue.

I hope you're right! I would trade my Zimbabwe dollars for Euro's like immediately!

[Roger D.]

I posted this chart about a week ago. With all the talk about the high TRIN levels, this chart shows the price action that goes with it. Of course this is the FTSE, but a good part of our market selling is coming from Europe and Asia.

Child and Parent fractal? I'm not sure but you can see the outcome in the smaller formation.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/33c2a166-8d5b-4183-9fc3-0ab7ae1eaa00

[Clueless in Seattle]

Also Rin-Trin-Trin was a loyal dog and had a good sense of smell. Plus dogs just "know Things"

[Hockthefarm]

Y:

I buy into the notion of distribution prior to a top. The smart money sells their shares to the bag holders.

But if you look at the 10 day trin on the above chart, the lowest readings on the entire chart occur between the 2.62 peak and the green crisis box.

Is that implying that there was very little distribution by the smart money after the 2.62 signal?

Dent uses smart money distribution a lot in generating his forcasts. It is the one thing that has been lacking.

Thanks
Hock

[Hockthefarm]

Yo min!

Prechter Called the Uptrend 'Out' in April

By: Elliott Wave International | Wed, Jun 9, 2010

With two outs in the ninth inning, a first-base umpire called "SAFE" when the runner was clearly "OUT." But this was no ordinary missed call; it cost Detroit Tigers pitcher Armando Galarraga a perfect game.

And as the blogosphere flooded with memories of other historic slip-ups that cost "so and so" star "this and that" honor. Demands for the commissioner of baseball to reverse the bad call grew louder by the hour.

It was indeed a very bad call. But the biggest, baddest call of all was not made on a sports field. It was made in the field of finance -- specifically on the stock market. To wit: The mainstream umpires of finance stood near first base, and in April made this emphatic call for the uptrend in stocks:

"SAFE!!"

In case you missed the event, here's an instant replay:

"Stocks Remain In A Powerful Bull Market." (April 10 Bloomberg)
"Stocks Haven't Lost Their Appeal As The Market Goes Up, Up, And Away." (April 21 US News & World Report)
"You can use any number of words to describe this bull market. Frothy is not one of them. This market is reasonably priced." (April 21 AP)
"US Stocks Post Longest Winning Streak Since 2004. The recovery should be sustainable and that will drive the market." (April 24 Bloomberg)
"All the economic reports are pointing up... despite lingering worries over debt problems in Greece. Right now, there is virtually no evidence of a top." (April 30 USA Today)
Yet from its April 26 peak, the DJIA turned down in a jaw-dropping 1000-plus point selloff. The market suffered its worst May since 1940.

The markets have no commissioner to reverse the bad call of the financial mainstream. But at least one team of analysts remained ahead of the most game-changing moves in the world's leading stock market, including a forecast that called the rally "OUT" in April 2010. Consider the following insight from EWI President Robert Prechter:

On April 16, Prechter published his April Elliott Wave Theorist titled ""Deadly Bearish Picture." Notice the dates.

"We can project a top...between April 15 and May 7, 2010. It is rare to have technical indicators all lined up on one side of the ledger. They were lined up this way -- on the bullish side -- in late February-early March of 2009. Today, they are just as aligned, but on the bearish side."

April 26 marks the high for the DJIA, followed by the devastating drop on May 7 -- exactly within the date range Prechter's forecast called for.

Not bad for a mule skinner.
Hock

[Carlos Julio]

Hi Sir let me send you my thought

Perfect test 1068,1072 area reaction wasn`t good.
Until now 4 sessions this downswing expect reversal between 9 or 11 session
Test 1024-1000 or to be perfect 998 expect more 4-6 session to print that target
Expect possible bottom short-term 16/06/2010
The same extension points and data 16/06/2010 = 998
http://2.bp.blogspot.com/_MJqKtyMMr28/TBARPar0PhI/AAAAAAAACBc/l4OU3O1qd2A/s1600/spx+10062010+3.png
http://3.bp.blogspot.com/_MJqKtyMMr28/TBASDrhj6yI/AAAAAAAACBg/uSWQTDW003E/s1600/SPX+10062010.png
or all analys here http://followmarketrend.blogspot.com/2010/06/spx-daily-market-thought-expect.html

[Roger D.]

The SPX Daily, todays action wasn't what the bulls were looking for. This chart to me looks extremely weak and each rally is met with increased selling. That is exactly what I would expect out of this wedge. Tonight and tomorrow will be extremely important for the EUR and the futures. Will the market bounce again, I doubt it. The volume is picking up and that is most bearish.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/d8453756-d6f7-4d44-a2b4-8d0271e7597d

[Nitram]

I appreciate this site. In an attempt to contribute overlap the chart of BP with the DOw for the past 2 decades. BP down 18% today. http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=bp&time=20&freq=2

[Account Deleted]

Dow jones analysis after closing bell
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-analysis-after-closing-bell_10.html

[JT]

Bearish sentiment now up to 31.9% with Investor's Intelligence newsletter writer survey. Was at 28.4%

Bulls now down to 38.5%

[Roger D.]

BP Monthly

Sure looks like P3 to me, kinda makes me warm and fuzzy all over.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/da8ed123-f8b7-4cd6-be1a-6a09667a2523

[PTrainer]

Terry Laundry of T Theory who has been in the forecasting business for 35 years and runs an investment fund, explains in the following commentary why the high Trin of last Friday was not indicative of a buying opportunity - http://ttheory.typepad.com/files/tto20100606srtcommentary.mp3
Terry believes we have entered a long bear market with possible depression implications. He had previously been bullish from April 2009 until about a month ago.

[Roger D.]

PTrainer,

Thanks for sharing this, I learned something new. Terry's Sunday May 6th is great also.

Roger D.

[Roger D.]

oops that's June 6

[Roger D.]

Ptrainer,

Thanks for posting this, I learned somehing new. Terry's June 6th is good also.

Roger D.

[Min]

"Yo min!

Prechter Called the Uptrend 'Out' in April

By: Elliott Wave International | Wed, Jun 9, 2010
Posted by: Hockthefarm | Wednesday, June 09, 2010 at 03:32 PM"

Hock The Farmer;

Looks like your Boy did good (THIS TIME).

I don't know where your data came from exactly but if it's from the EWI website they have been known to be excellent Spin-Doctors.

As a subscriber many years ago I witnessed their craftiness in focusing everyone's attention on the ocassional good call in order to obfuscate their dismal overall track record.

I'm not saying that was the case here as I have no way of fairly judging their actions first-hand over the last few years.

But the fact still remains that their overall track record is 26% correct according to CXO Advisory's Guru Watch. My direct Tally based on their calls through Subscriber-Only Services (EWFF, EWT, STU) was 10% correct in the first part of the decade —also a fact. There are also many others here that coroborate this as well.

Obviously a 26% right track record is impressive to you what can I say, maybe it's 'cuz you're a Farmer?

At any rate, 26% right means he nails it one in every 4 attempts. I do a lot better than that so why would I look to someone like that for mentoring? I divulge this for those who have never had any dealings with Prechter and are looking to maybe start.

It's beyond me why the guy has people like you still fanning his acolades. In this regards, Prechter impresses me. He needs to be awarded a "Hoofwinker of the Century" award or something like this.

I doubt you would ever employ anyone on your farm with that kind of actual job record. Imagine someone that only harvests a field correctly 1 in 4 times —just doesn't cut it.

[Min]

Hock;

Prechter also called the rally over as far back as August 2009 (maybe even earlier). I remember because I still had my longs open then and didn't close mine out for another 3 months or so.

So his calling the rally out in April was probably his 8th call or something. That would be more typical EWI behavior.

Can anyone verify or disprove that (other than a blindly loyal fan)

[Michael]

Hi Min,

Yes, you are correct.

Prechter went 50% short the first week of August with a special update that was released "early" with a sense of urgency. The SPX wasa t 1000 at the time. He then told subscribers to add another 50% short around 1038.

So basically, Precter was 100% short at an average of 1019 SPX before he advised going 200% short later in November. Funny how we haven't even gotten back to his original 50% short level at SPX 1000.

[GLN]

What the fuck? !!!!

The idiot of Gleen Neely has NO clue about the market:

http://www.traders-talk.com/mb2/index.php?act=attach&type=post&id=16865

What a loser!!... Does anyone here pays to this clown to receive this garbage?

Now I totally understand why DG is broke!! This NEOWAVE shit is just GARBAGE!!

[OracleLurker]

near term views of the punditry (As i understand it):

Neely: Bearish
Tony C: Bearish
Carl Futia: Bearish (i'm not making this up)
T-Laundry: Bearish
Tim Knight: Bearish
Evil Speculator: Leaning Bullish
Roger D. (take a guess)

I predict mole will be back here congratulating himself before the end of the week as soylent green plays itself out.

I still have a buy signal staring me in the face - as pathetic as this up-phase has been there is still a lot of gas in the tank to push this thing higher for a week and we still haven't taken out the lows from 5/25.

[DG]

Now I totally understand why DG is broke!! This NEOWAVE shit is just GARBAGE!!

Posted by: GLN | Wednesday, June 09, 2010 at 07:18 PM

It's more likely that you're broke from trying to "bet the farm" on one Neely trade back in the day, which is the basis for your long-standing series of tirades against him. Sucks to be you. Neely always says don't risk more than 1-2% on a single trade. I'm doing just fine, thanks.

And, FYI, all Neely is saying in that chart is to stay out because the count is uncertain. I don't see anything wrong with that. Would you rather he recommend a trade just for the sake of recommending a trade?

[Hockthefarm]

min:

I really think it is all a matter of time frames. You look at the orchard and wonder what the yield is going to be this year. I look at it and say, "will it be a good ten year investment".

It is not a criticism on my part. Everyone has a time frame they like.

I want to get the big 5 to 10 year trends right.

RE: flucked beyond recognition just as Prechter said.

US$: strong rally just as Prechter said.

Infl/Defl: massive stim-no inflation just as Pr said.

Implications of debt: we are broke just as Pr said.

Au: Pr wrong here for now imo. Could see $1400. But if push comes to shove, as I think it will, you can throw your chunk of gold at me and I'll shove a tank up you ass.

I just want to get the long term important trends right. If I was buying RE today, you couldn't get me withing 30% of ask. Why? Because I understand the risk. And if the owner slams the door, well I'd just mossy over to one of the other 10,000 homes for sale in the area.

Prechter's main message was to preserve capital. Look what you can buy with it now, and the party hasn't even started. Hey, there ain't no shortages of anything when people are broke. I travel a lot for work. Hotels are empty. It is fantastic. I don't even book them any more.

Hock

[yelnick]

Hock, on the TRIN signal spike in Feb/Mar 2007 and the drop from Mar to Jul 2007, I am arguing the spike was a warning shot - a big move by smart money to get out - that wasn’t yet a general move by the herd. That took until July to commence. We may have just seen a similar move, but this time it might spook the herd.

[Wave Rust]

Hock
" ,,,, Hey, there ain't no shortages of anything when people are broke. I travel a lot for work. Hotels are empty. It is fantastic. I don't even book them any more."

I see the same ,,,, nobody going anywhere. And, it's all Bush's fault, of course.

If Prechter is really out there mocking others, since he got a couple recent calls right, then it's time to get a subscription to his newsletter. I need a good fade and he's gonna be wrong again for another long time period.

I'll wait till he's running ad campaigns on Squawkbox or maybe The View or Olberman

wave rust

up into the weekend?
panic monday and tuesday?

anybody want to bet they stop most of the oil flow this weekend?

[KRG]

"The idiot of Gleen Neely has NO clue about the market:
......What a loser!!... Does anyone here pays to this clown to receive this garbage?"- GLN

GLN: I pay for Neely's services. Quite a few people here apparently do too..

I am still trying to get a grip on NeoWave; but definitely it is an improvement over traditional EW. Many people on this blog would appreciate if you tell us what you don't like in Neely's method, given that each method will have its own drawbacks

You want pin point accurate predictions on markets.. Where would you get them? Instead why don't you give us..

[Min]

Hock, I think you're either related to Prechter, work for EWI or are the man himself.

But since your opinion is that Prechter is the all-knowing Soothsayer from Gainseville, Remember to basically stay out of everything until DOW reaches 400.

I'll make it easy on you. We'll allow your man a 400% FUDGE FACTOR. You can start buying whatever when DOW reaches 1600 fair enough! Ten years hence, let's exchange notes and you can tell me how that worked out for you. (You'll ne holding your then worthless dollars because the DOW won't come anywhere close to even 1600)

Your bed buddy has so far:

Missed a 5 fold rise in the dow since 1990

Six fold rise in Gold since 2000

Real Estate Prices where I live are still double what they were in 2000

He's basically been in cash since 1987. He can do that thanks to people like you.

Look I'm not saying he's wrong 100% of the time, only 90% and CXO advisory says wrong 75% of the time. You keep on adoring him by concentrating on that 10-25% and you'll be fine.

In the meantime I've concluded that:

HOCK IS DULL AS A ROCK!

[Tu Padre]

Oye GLN

Ya deja de estar chingando guey!

[KRG]

Tu Padre:

Convenido; Aceptado

Salud

[Tu Padre]

Gracias!

[Tu Padre]

Como quisiera darle unos buenos putazos a ese guey de GLN. Ya calmate guey o te va ir mal!

[Michael]

"I see the same ,,,, nobody going anywhere. And, it's all Bush's fault, of course." - Wave Rust

Yeah, there's no way that the BP disaster can be blamed on all of the flunkies that Bush had appointed to the regulatory agency that regulates offshore drilling . . . the Minerals Management Services agency. No way at all.

[DG]

Yeah, there's no way that the BP disaster can be blamed on all of the flunkies that Bush had appointed to the regulatory agency that regulates offshore drilling . . . the Minerals Management Services agency. No way at all.

Posted by: Michael | Thursday, June 10, 2010 at 07:10 AM

How about naming specific names? Otherwise, this is just "good guy/bad guy" generic political hackery.

[Michael]

"How about naming specific names? Otherwise, this is just "good guy/bad guy" generic political hackery." - DG

Try Algerian born and raised and staunch Wyoming Republican Miss Johnnie M. Burton, who was appointed by the Bush Administration to be Director of Minerals Management Services and was the foot soldier for Bush's former Secretary of the Interior Gale A. Norton, who was a strong advocate of domestic drilling and who stepped down from her post and subsequently joined Shell Oil, not too mention G. Steven Griles, a former coal industry lobbyist who became Deputy Secretary of the Interior in July of 2001.

http://www.nytimes.com/2007/01/16/business/16burton.html?ex=1326603600&en=49afa4b23a6cf5ef&ei=5090&partner=rssuserland&emc=rss

Griles was effectively the Interior Departments's COO and its top representative on VP Dick Cheney's energy task force. In 2007, he pleaded guilty to obstruction of justice in the Senate investigation of the Jack Abramoff scandal. It landed him in prison for 10 months.

I guess you are unfamiliar with the Energy Policy Act of 2005, signed by President Bush on August 8th, 2005. In it, are many of the Pro-Oil proposals that ushered in a new era of de-regulation that VP Cheney (Wyoming) had been pushing for since 2001, and have lead to the unsafe deepwater drilling environment that we have today.

http://winona360.winona.edu/winona360/feed-item/prelude-cheney%E2%80%99s-katrina

The Deepwater Horizon rig did not have a remote-control accoustic shutoff switch, routinely used on rigs around the world. The system costs about $500,000 per rig. In 2003, government regulators (MMS) switched directions towards mandating such a shut-off switch, commissioned another study, and came to the conclusion that "accoustic systems are not recommended because they tend to be very costly."

Quite frankly, I'm rather surprised that you are unaware of the Pro-Energy and De-Regulation Policy and influence that Bush, Cheney, Norton, and Griles put in place with respect to the Minerals Management Services Dept., a regulatory arm of the Interior Department.

In fact, a 2008 report by the Inspector General of the Dept of Interior ( Earl Devaney ) found that MMS employees had taken drugs and had sex with energy company representatives. MMS staff had also accepted gifts and free holidays amid a "culture of ethical failure," according to the investigation. MMS staff had routinely accepted meals, tickets to sporting events, and gifts from oil companies.

Regulators in the Gulf Region were also to have been found allowing industry officials to fill in their own inspection reports in pencil and then turned them over to regulators, who then traced ove rthem in pen before submitting the reports to the Agency.

The MMS has gone down as one of the most corrupt Federal agencies in the history of our nation. Again, I'm surprised that you are unaware of this and how it was used by the Bush Administration to cut corners providing Big Oil with a largely unregulated and environmentally exempt environment to do business.

[DG]

The MMS has gone down as one of the most corrupt Federal agencies in the history of our nation.

Uh, dude, Medicare has something like $60 billion in fraud EVERY YEAR. The amount of fraud coming out of MMS is probably a rounding error compared to that.

http://abcnews.go.com/Nightline/medicare-fraud-costs-taxpayers-60-billion-year/story?id=10126555

Unlike you, apparently, I ASSUME every single person in the federal government is a completely corrupt useless loser, so I'm never surprised if that turns out to be the case.