Overview:

Richard Arms developed the TRIN, or Arms index, as a contrarian indicator to detect overbought and oversold levels in the market. Because of its calculation method, the TRIN has an inverse relationship with the market. Generally, a rising TRIN is bearish and a falling TRIN is bullish. Sometimes you will see the scale of the TRIN inverted to reflect this inverse relationship.

Calculation

The TRIN is the advance/decline ratio divided by the advance volume/decline volume ratio:

Charts:

TRIN 5 min	The direction (not the level) is the most important. If the trend is up, then it is bearish, if the trend is upward, it is bearish. For example, if it's the middle of the day and the market is falling, but the TRIN begins to trend upwards, then it is very likely that the market intra day downtrend will reverse and trend up - and vice versa.
TRIN 60 min	Greater then 1 is bearish, while less then 1 is bullish. However, extremely high levels, such as above and especially 2.5 are rare and are a bullish contrarian indicator. For example, the longer the TRIN remains above 2, the more likely the market is to experience a strong rally
TRIN 3 month