The Hindenburg Omen Has Arrived

Tyler Durden's picture

Easily the most feared technical pattern in all of chartism (for the bullishly inclined) is the dreaded Hindenburg Omen. Those who know what it is, tend to have an atavistic reaction to its mere mention. Those who do not, can catch up on its implications courtesy of Wikipedia, but in a nutshell: "The Hindenburg Omen is a technical analysis that attempts to predict a forthcoming stock market crash. It is named after the Hindenburg disaster of May 6th 1937, during which the German zeppelin was destroyed in a sudden conflagration." Granted, the Hindenburg Omen is not a guarantee of a crash, and the five criteria that must be met for a Hindenburg trigger typically need to reoccur within 36 days for reconfirmation. Yet the statistics are startling: "Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and
usually takes place within the next forty-days." The last Hindenburg Omen occurred during the lows of 2009. Today, we just had another (unconfirmed) Hindenburg Omen. It is time to batten down the hatches - something big is coming.

As a reminder, the 5 criteria of the Omen are as follows:

  1. That the daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
  2. That the smaller of these numbers is greater than or equal to 69
    (68.772 is 2.2% of 3126). This is not a rule but more like a checksum.
    This condition is a function of the 2.2% of the total issues.
  3. That the NYSE 10 Week moving average is rising.
  4. That the McClellan Oscillator is negative on that same day.
  5. That new 52 Week Highs cannot be more than twice the new 52 Week
    Lows (however it is fine for new 52 Week Lows to be more than double new
    52 Week Highs). This condition is absolutely mandatory.

Today, all five conditions were satisfied. June 2008 was another such reconfirmed event, and as Barron's pointed out then, "there's a 25% probability of a full-blown stock-market crash in the next 120 days. Caveat emptor." Boy was the emptor caveating within 120 days (especially if said emptor was named Dick Fuld). Which brings us to the present: should the Omen be reconfirmed within 36 days, all bets are off.

h/t Teddy KGB

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faustian bargain's picture

"Do not panic. Please form single file lines and proceed in an orderly manner to the nearest -- aaaaaaaaaugh!"

Tense INDIAN's picture

"Remain Calm , ALL IS WELL" from the movie "animal farm"

The Rock's picture

The H.O. has arrived bitchez!

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iamrage's picture

"Look at them.  Calm as Hindu cows.."

Hephasteus's picture

If chimps raping frogs becomes a necessary component of this Omen you are going to get blamed for it.

Tarheel's picture

Dont worry, Uncle Tom and Grampa Bernanke will use the PPT to hold up the market....right...

william.smith61's picture

One of the main open questions on QE2, is how large the Fed's next monetization episode will be. This year's most prescient economist, Jan Hatzius, has predicted that the minimum floor of Bernanke's next intervention will be around $1 trillion, which of course means that he likely expects a materially greater final outcome from a Fed that is known for "forceful" AC Condenser

cole's picture

I do not believe in predictions. The only thing that can help is the technical analysis or chart in that report on a graph the tensions between buyers and sellers and the trading volume. But this analysis can only be taken as an aid to other economic studies and results.

 

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aint no fortunate son's picture

Yo, Tyler, we algo's don't give a damn bout no stinkin blimps...

whatsinaname's picture

oh yeah..am gonna get more PCLN, NFLX, AMZN, GOOG as Robo suggested...

Red Neck Repugnicant's picture

If everyone knows/believes the bear argument, and few people believe the bull argument, will the market most likely go up or down?  Does the market follow popular consensus or does it move against it?

It's very funny to see so many of you believe in future inflation, yet remained mystified as to why the market remains buoyant. 

 

 

Young's picture

If no one was short a day ago (ackording to the stats), people have been buying calls, the baby boomers won't do another buy the dip gamble - would you be short or long? That said, bears have gotten a lot of exposure in media - but as long as Jimbo Cramer says buy, i'm confident we can short.

Ned Zeppelin's picture

Belief in inflation? You mean, ZH believes the Fed will be successful in engineering the reflation of assets in an orderly manner by means of its policies?

Nope. No one agrees with that.  Deflation is where we are headed (already there), and hyperinflation, not inflation, could be the consequence.  Given the marked redcution of final demand, we do not understand the "buoyant market," or the sell-side propaganda that has accompanied it. 

Red Neck Repugnicant's picture

Don't fault yourself.  Jesus loves everyone equally - except homosexuals. 

SheepDog-One's picture

What 'market'? You mean that computer that throws out fake algo bids all day? Whatever, moron.

Kreditanstalt's picture

"DO NOT PANIC...we are trained professionals.  We are going to go AROUND the leaf...!" - "A Bug's Life"

"I suggest you panic." - Hugh Hendry

russki standart's picture

Robert McHugh

offers interesting commentary and a rather good explanation.

 

nmewn's picture

Computers don't panic.

Datafox's picture

I forget where or exactly when but during the great depression there was this saying:

"The most frightening words are; We're from the government and we're here to help."

cole's picture

Now the fear is the rating agencies or AAA rating when they say next bankruptcy danger

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Datafox's picture

I forget where or exactly when but during the great depression there was this saying:

"The most frightening words are; We're from the government and we're here to help."

(sorry for the repost.  It was the math question that threw me.  Needed 2 characters instead of 3.

Village Idiot's picture

At-a-vis-tic

"relating to ideas from distant past. relating back to feelings or ideas that people had in the distant past"

 

thank you.

DoChenRollingBearing's picture

I sent my signal today, Village!  Did you?  I have not seen here at ZH anyone else fessing up to stripping $500 from the ATMs today.

Tomorrow I sentence myself to (mostly) staying in the gold threads...

VWbug's picture

I took out $500 today, but i do that quite often, I don't really get it

zhandax's picture

I get it, I am just not sure my bank will considering I have have drained a grand out of the ATM a couple of times in the last twelve months.  Guess it will depend on how much company I had.

the grateful unemployed's picture

Four days ago I put cash in the 2X bear Profund. Today I pulled it out, and put it in the SHort Gold Stocks fund. 

Village Idiot's picture

Loud and clear, DoChen.  I would really like to know what kind of numbers were inspired?  Maybe ZH can plug in some sort of poll taking computer thingy - that would really get things going, imho.

 

I will try and catch up with you tomorrow in the gold room. I asked for a call on Au last week as I want to start building a position in the phys.  the advice I got essentially suggested 1050 to start and 1000 to add.  I am seriously interested because I value this persons opinion. 

 

DoChenRollingBearing's picture

Village, yes, that would be very interesting to have ZH either do a poll or use their computers to advise if this went viral.  A few people I know said they would.  Several people here at ZH said they would, and a couple from FOFOA's site said they would as well.  I will go check fofoa after I finish up here.

...

Gold, well, about four or five threads down from this one there is a nice & rancorous back and forth between JB and we gold guys.

My take on gold, and has been for many years, is that the price per oz does not really matter much to me.  If I have some money I buy the gold.  Sometimes I will delay a purchase for whatever reason.  But I never sell.  I hope to GIVE IT AWAY.  The Power of Giving!

I am 1/2 in FOFOA's camp (ultimate wealth preserver) and 1/2 in the gold as insurance vs. bankster and .gov malfeasance wrecking the world economy.  I buy gold because I believe both camps have merit.

...

I let myself be conned into going to ORI's blog.  YOU, Village, got a nice little write up!  If you want to give yourself a pat on the back, it's worth a look.

Village Idiot's picture

Thank you for the insight, DoChen.  I tend to agree with the idea of buying whenever the mood is right, if that's what I hearing you say.  My problem is that I tend to get a little compulsive when I start on a new project - I like to jump right in. If all that is portended is somewhere around the corner, i would like to build a pretty sizable position. It would be nice to buy on the way down before it starts to really head the other way. Basically, I would like to make a perfect trade.

 

DoChenRollingBearing's picture

I am a terrible trader VI.  Long term I usually get things right.  The perfect trade, let me know how that works out...

Actually, I have been buying gold in small increments (1 - 3 oz at a time, typically, although I did buy 10 oz of platinum one time from MONEX because it is harder to find, and I really like platinum too) from coin shops since the 1980s.  Last time I paid spot + $70.  I did buy heavier starting about 2002, so my average cost basis is not so good (average paid price I would guess about $1000 / oz).  Yes, I bought some near the peak as well (+/- $1220), but, again, I do not worry much about the price, I look at the price but it does not my behavior...

A cousin just started buying gold, he came into an inheritance, and started doing things like it looks like you want to.  He pretty quickly got up to 48 oz and has more silver than me and everyone else I know put together!

If you have more than enough FRNs or in the bank to carry you through for awhile, then you may as well jump in and buy.  In that below thread "Today's Winner: Gold" you will see people saying gold will do this or that.

I like FOFOA's response: "It's all about the ounces!"  How many oz you have is what's important.  And if you happen to be a dad (like I am), it will become clear to you REAL QUICK what comfort gold can give.

Disclosure: about 6% of my holdings are in gold, en route to 7%.

RockyRacoon's picture

As I posted elsewhere, DCRB, I actually closed a Regions Bank account and opened one at a local bank.  Already have an account at an S&L.

Village Idiot's picture

"And if you happen to be a dad (like I am), it will become clear to you REAL QUICK what comfort gold can give."

I am a father.  And now that I am blessed with someone other than me to look after I am especially greedy...for the protection of my child.  If that protection turns out to be from gold,  I will be happy.  I want my child to always know that his father (and mother) are there to keep him safe.  I want him to feel the warmth that safety brings, and I want him to be proud of the fact that his parents were strong enough to provide.  And I want him to pass it on.

Every parents desire, no doubt.

 

One silver lining in this shit storm - he will probably be a better listener, and be more well behaved.

 

*stepping down from soap box*

merehuman's picture

I keep 5.00 in a bank. Been like this for the last year.

Tense INDIAN's picture

me too ...dnt know when that Shitty bank is gonna blow up......its got a D- rating in weiss research lists of banks.....

Hephasteus's picture

Haha. I have 11 dollars in the bank.

Cognitive Dissonance's picture

What a strange coincidence because you owe me exactly $11. I'll waive the interest and penalty if you pay within 24 hours. I take PayPal. :>)

merehuman's picture

congratulations. Fatherhood brings a change in state of conciousness for sure. Something the childless will not experience. It brings a sense of strenght and maturity to a new perspective.

Good on you VI.     Beware the baby food. Much is tainted. Google 'early breast development due to infant formula.'

Henry Chinaski's picture

For more comfort, teach those kiddies how to shoot, Daddy-O.

Village Idiot's picture

just a few more years...looking forward to it.

andyupnorth's picture

I feel bad for not withdrawing any cash today :-(

Although I didn't think it would affect banks here in Canadia, eh...

Village Idiot's picture

No worries, it's the thought that counts.  And there's always next time.