of stocks closing higher than their previous trade from those closing lower, NYSE trading only. 2A comparison of the number of advancing and declining issues with the volume of shares rising and falling. Generally, a trin of less than 1.00 indicates buying demand; above 1.00 indicates sell- ing pressure. z-NYSE or Amex only.         Source: Wall Street Jour ugust 21, 1997. Repr inted Wall Street Jour 1997 Do Jones Company Inc. Rights Reser W ldwide     smaller, because the price decline is taken as representing broader-based selling pressure. For example, the trin statistic ("trin" stands for trading index) equals   Volume declining/Number declining Trin   Volume advancing/Number advancing   Therefore, trin is the ratio of average volume in declining issues to average volume in ad- vancing issues. Ratios above 1.0 are considered bearish because the falling stocks would then have higher average volume than the advancing stocks, indicating net selling pressure. The Wall Street Journal reports trin every day in the market diary section, as in Figure 12.4. Note, however, for every buyer there must be a seller of stock. High volume in a falling market should not necessarily indicate a larger imbalance of buyers versus sellers. For ex- ample, a trin statistic above 1.0, which is considered bearish, could equally well be inter- preted as indicating that there is more buying activity in declining issues. The efficient market hypothesis implies that technical analysis is without merit. The past history of prices and trading volume is publicly available at minimal cost. Therefore, any information that was ever available from analyzing past prices has already been reflected in stock prices. As investors compete to exploit their common knowledge of a stocks price history, they necessarily drive stock prices to levels where expected rates of return are ex- actly commensurate with risk. At those levels one cannot expect abnormal returns. As an example of how this process works, consider what would happen if the market be- lieved that a level of $72 truly were a resistance level for stock XYZ.