Arms index

Trading-volume based indicator of stockmarket strength and breadth computed by comparing advance-decline ratio to the upside-downside ratio. The result is smoothed with a moving average the period of which may vary from 4 to 55 days, depending on whether it is a short-term, intermediate-term, or long-term analysis. An index value of 1.0 indicates the market is in a neutral state, a higher value indicates a bearish trend, a lower value a bullish trend. Invented by a US financial consultant, Richard W. Arms, Jr., in 1967. Also called trading index (TRIN). Formula: Advance-decline ratio ÷ Upside-downside ratio.