what does the arms index trin tell you 
the arms index seeks to provide a more dynamic explanation of overall movements in the composite value of stock exchanges such as the nyse or nasdaq by analyzing the strength and breadth of these movements an index value of 1 0 indicates that the ratio of ad volume is equal to the ad ratio the market is said to be in a neutral state when the index equals 1 0 since the up volume is evenly distributed over the advancing issues and the down volume is evenly distributed over the declining issues many analysts believe that the arms index provides a bullish signal when it s less than 1 0 since there s more volume in the average up stock than the average down stock in fact some analysts have found that the long term equilibrium for the index is below 1 0 potentially confirming that there is a bullish bias to the stock market 1on the other hand a reading of greater than 1 0 is typically seen as a bearish signal since there s more volume in the average down stock than the average up stock 1the farther away from 1 00 the arms index value is the greater the contrast between buying and selling on that day a value that exceeds 3 00 indicates an oversold market and that bearish sentiment is too dramatic this could mean an upward reversal in prices index is coming conversely a trin value that dips below 0 50 may indicate an overbought market and that bullish sentiment is overheating traders look not only at the value of the indicator but also at how it changes throughout the day they look for extremes in the index value for signs that the market may soon change directions the difference between the arms index trin and the tick index tick trin compares the number of advancing and declining stocks to the volume of both advancing and declining stocks the tick index compares the number of stocks making an uptick to the number of stocks making a downtick the tick index is used to gauge intraday sentiment the tick index does not factor in volume but extreme readings still signal potentially overbought or oversold conditions 