THE ARMS INDEX
The Arms index, also known as TRIN or Trader's Index, was developed by Richard Arms in 1967 to
indicate when abnormally high volume is accompanying either advancing or declining stocks. The index
is based on the assumption that volume tends to swing in the direction of market sentiment. If we are in a
bullish atmosphere, volume will tend to be proportionately higher in the stocks that are going up. If the
bears are in control, the volume will tend to be proportionately heavier in those stocks that are declining.
The formula is a ratio of two ratios: