Most who subscribe to the idea that market timing is an ill–conceived strategy are efficient market hypothesis (EMH) theorists. The EMH states that stocks are so accurately priced that their past movements are useless in predicting the future.

A lot has happened since the EMH was introduced in 1950. The advent of faster computers has allowed researchers to analyze market microstructure with much more precision than ever thought possible. These studies have shown that stock prices are significantly less efficient than previously thought.

Two indicators that have proven to be very popular among technical analysts are the advance/decline ratio (ADR) and the short–term trading index (TRIN, or Arms Index). Extensive research has been conducted to determine their usefulness in forecasting short-term market movements.