So what’s this “Hindenburg Omen” you may have been hearing about lately? Is it an economic conspiracy theory, or does it really have any value as a leading indicator for a market slowdown?
The Hindenburg Omen is a technical indicator created by the blind mathematician, Jim Miekka, that is supposed to predict financial crashes – and it appeared behind every market crash from 1987 and onwards. The problem is that it has also been confirmed several times after which no market crash has ensued. In other words, its rate of success so far has only been 25%.
Still, many analysts pay heed to the Hindenburg indicator. It has a detailed list of criteria that must be met for the Omen to be confirmed. And in fact, the Hindenburg indicator was tripped this past week with the Dow Jones dropping more than 3%, leading the year’s gains back into the red.
Why We Could Still See Another Market Crash This Year
Hindenburg Omen Criteria For Market Crash
52-week highs and lows.
The daily number of new 52-week highs and lows must each be greater than 2.5% of the total issues traded that day.
NYSE Moving Average.
The 10-week moving average on the NYSE must be rising.
McClellan Oscillator.
The McClellan Oscillator is a measure of market fluctuations, much like the VIX, and in order to confirm the Hindenburg Omen it must be in the negative (whatever that refers to).
New highs.
New 52-week highs can’t be more than twice the newest 52-week lows.
I don’t know about you, but the Hindenburg Omen reminds me a little of trading based on moon cycles. These indicators are so random that they’re too complicated to follow. Still, a 25% success rate is phenomenally higher than chance. And the Hindenburg Omen is rearing its head right now, predicting a stock market crash in September 2010. (But isn’t there some kind of September stock market crash every year?)
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{ 7 comments }
When are people going to wake up and smell the peculated corruption.
obama keeps saying things are getting better, but the websites I visit for the [REAL DATA] you know the hard core true, and solid facts are saying we are in for a really rough trot. If we look back at the past and before the 1930 depression, the government saying things would be fine, and recovery was coming, soon after they said that the stockmarket collapsed 90% and the depression came. I think we are dealing with that again. Thank god for the truth bearers, as little as they are.
A good guy worth checking on youtube, he is great http://www.youtube.com/watch?v=gn6kS4l2yFM and predicted the last crash, and brings the truth.
I believe for the sign to foretell a crash with a high success rate, the omen must be triggered more than once within a certain number of trading days.
Right, and that’s what happened. The final or “official”/complete trigger occurred last week.
IMO It’s “Conspiration theory”.
The only thing in common on all market crashes is that people are not expecting for it. When I see so much pessimism and the theory behind this “Hindenburg Omen”, I feel we’re probably near the bottom, not the top.
Just my 2 cents, and good article by the way.
Thanks. Well, that’s the “wall of worry” theory, right? When that many people are worried, perhaps sentiment has tipped too far in the bearish direction. I don’t place a lot of weight on the H.O. More analysis is needed to see what it might really signify. It’s certainly not completely random, but it’s also not a historically failsafe indicator.
@Emma, what websites do you visit for the “real data”? Recommendations are always good.
ghehheheheheheheherheheheheheheh
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