How to Interpret Predictive Power of Traders Index (TRIN)

The following table reveals how Traders Index (TRIN) movement is used to predict the future market movement based on the TRIN development.  

Sentiment	TRIN	Market	Interpretation
Bullish	Up from bottom	Up	TRIN confirms market’s moving up.
Bullish	Up from bottom	Down	TRIN fails to confirm the down trend, correction/reversal is likely.
Bearish	Down from top	Up	TRIN fails to confirm the down trend, correction/reversal is probable.
Bearish	Down from top	Down	TRIN confirms market’s moving down.

Correlation between TRIN movement and future market direction.

Source from Stock Market Indicators, by Dr. M. Metghalchi. (Edited by authors)

 

Generally speaking, when the TRIN trends up from the bottom, the market shows a bullish sentiment.  However, there are two outcomes associated with this movement and sentiment. 

If the TRIN agrees with the market uptrend direction, then the market will move up. Otherwise, the market is more likely to decline. Likewise, when the TRIN shows a bearish sentiment, the TRIN could foreshadow an uptrend or downtrend of the market as well. 

          If you need more information about the TRIN, you can read this article:

 

         http://top5indicators.blogspot.com/2013/09/how-to-interpret-traders-index-trin.html

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