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Hi all,
I was wondering if someone could enlilghten me on the issue of advance/decline volume and the TRIN.
I think we all pretty much understand how the trin is calculated, however I need clarification on advances/decline volume. Advances/Decline issues is pretty straight forward - if a security is currently trading above its closing price from the previous day then the stock is considered to be part of the days "advances" group.
As regards advances/declines volume, it is suggested that if the a particular security is trading above the close of the previous days trading then the volume is considered to be part of the "advances" volume group.
Now, to give you a practical example I compiled a TRIN for the stocks that form the Health care sector within the S&P 500. Merck & Co, MRK., which is within the health care sector was trading above its previous days close but the volume was falling real hard, however the TRIN would put the volume for MRK within the advances group simply because its price was trading above the previous days close. This can make the TRIN appear bullish because its allocating all the volume for MRK into the advances group when in actual fact the the volume is declining and therefore should be placed within the declining group.
I guess one approach would be to calculate the TRIN based on whether the current price is higher than the last price. That way, we can assume that the volume is actually increasing and therefore be allocated to the advances group.
I would really appreciate your comments and suggestions as I'm a littled puzzled.
Cheers
Carlton
I was wondering if someone could enlilghten me on the issue of advance/decline volume and the TRIN.
I think we all pretty much understand how the trin is calculated, however I need clarification on advances/decline volume. Advances/Decline issues is pretty straight forward - if a security is currently trading above its closing price from the previous day then the stock is considered to be part of the days "advances" group.
As regards advances/declines volume, it is suggested that if the a particular security is trading above the close of the previous days trading then the volume is considered to be part of the "advances" volume group.
Now, to give you a practical example I compiled a TRIN for the stocks that form the Health care sector within the S&P 500. Merck & Co, MRK., which is within the health care sector was trading above its previous days close but the volume was falling real hard, however the TRIN would put the volume for MRK within the advances group simply because its price was trading above the previous days close. This can make the TRIN appear bullish because its allocating all the volume for MRK into the advances group when in actual fact the the volume is declining and therefore should be placed within the declining group.
I guess one approach would be to calculate the TRIN based on whether the current price is higher than the last price. That way, we can assume that the volume is actually increasing and therefore be allocated to the advances group.
I would really appreciate your comments and suggestions as I'm a littled puzzled.
Cheers
Carlton