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The Arms Index is a volatile breadth indicator that can be used to generate overbought and oversold signals. It is preferable to trade in the direction of the underlying trend. Short-term traders can use the unadulterated Arms Index to generate short-term signals. In this chart the 89-day moving average is used, the current reading has hit the overbought level reached back in December of 2009. The percentage of stocks trading over the $NYA 50 day moving average is at an oversold low too. High volatility, granted not the historical levels a year ago, but still high enough. All -in-all a short term oversold reading.