Suppose, on August 27, there were 1,455 stocks that advanced on the NYSE and 1,553 that declined. The volume in advancing issues was 852,581, and the volume in declining issues was 1,058,312. The train ratio for that day was ________, and technical analysts were likely to be ________. A. 0.87; bullish B. 0.87; bearish C. 1.15; bullish D. 1.15; bearish
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To solve for the "trin" ratio, also known as the Arms Index, we use the formula:
Trin = (Number of Advancing Issues / Number of Declining Issues) / (Volume of Advancing Issues / Volume of Declining Issues)
Using the numbers provided:
Trin = (1,455 / 1,553)
Trin = (852,581 / 1,058,312)
First, calculate the Issues Ratio:
Issues Ratio = 1,455 / 1,553
Issues Ratio = 0.9369
Then, calculate the Volume Ratio:
Volume Ratio = 852,581 / 1,058,312
Volume Ratio = 0.8057
Now, divide the Issues Ratio by the Volume Ratio to get the Trin:
Trin = 0.9369 / 0.8057
Trin = 1.1628
The Trin ratio (Arms Index) of approximately 1.16 suggests that there is more volume in the declining stocks than in the advancing stocks. This is typically seen as a bearish indicator by technical analysts. Therefore, the closest answer, considering the decimal approximation, would be D. 1.15; bearish.