The NYSE traditional TRIN (aka ARMs Index) posting last Thursday was 0.193 using WSJ breadth and volume numbers. It turns out, Thursday's TRIN number was one of the lowest in the past 66 years (over 17,200 trading days).
First is a table describing the dates of all TRIN readings since 1940 less than 0.22... Thursday's TRIN of 0.193 places 20th lowest in the past 66 years.
If the above table is sorted on dates, 21 of the 30 lowest TRIN posting occurred before 1950. Taking a close look at the days with low TRIN readings, I found some the low TRIN readings fell on days where declining stocks actually out-numbered advancing stocks.
To get a better understanding of what unfolded historically after low TRIN readings appeared with the market climate similar to that we are currently in, I placed a couple of filters for culling out dates with low TRIN readings where the market climate was nothing like what has been in place recently:
1) Advances must be greater than declines
2) The TRIN 10 day MA must be greater than 1.05 two trading days prior to the low TRIN value event. This filter is an attempt to look at what low TRIN readings mean following weakness in the NYSE.
After culling out the low TRIN days per the above filters, the next table lists the survivors as well as how the SPX fared in various time intervals following the event. The last row in the table throws out the 1940s events, and looks at consequences with price from 1950 forward. The label cell in the last row was truncated, but the row gives returns in the SPX from 1950 on following the low TRIN events.
The following charts have circled on the red SPX curve, the approximate area where the low TRIN readings surfaced.
The 1982 event:
The 2003 chart for the low TRIN event (March 2003) can be accessed about anywhere, so I will leave it to the reader to research the aftermath of the 2003 low TRIN event.
Have to get to work, so the summary is brief: historically, low TRIN readings as posted June 15, 2006 result, on average, in higher prices prices going forward. It will be left to reader to offer theories why this time will be different.