Courtesy of John Nyaradi.
Hindenburg Omen flickers again on Tuesday
The Hindenburg Omen that is said to warn of stock market declines flashed again on Tuesday, August 13th, in an unusually heavy concentration of occurrences known as a Hindenburg Cluster. The current cluster is reported to be a new record with five occurrences over the last eight trading days.
The Hindenburg Omen has preceded steep declines in the S&P 500 (NYSEARCA:SPY) and Dow Jones Industrial Average (NYSEARCA:DIA) on multiple occasions, including the period of January-February 2000, just before the onset of the tech wreck and in the spring of 2006, just before another significant decline in the S&P 500 (NYSEARCA:SPY)
Most analysts of the Hindenburg Omen say that more occurrence in a cluster amplify the chances of the indicator’s accuracy.
The current cluster is similar to the ones that occurred in late 2007 and in 2000 before the tech wreck decline.
The confirmed Hindenburg Omen clusters of July, 2007 and October, 2007 were followed by a greater than 10% decline on the S&P 500 (NYSEARCA:SPY) following the July event and the big waterfall descent in the S&P 500 (NYSEARCA:SPY) of more than 55% that began in October 2007.
The Hindenburg Omen cluster of October, 2000, came just in front of the 50% S&P 500 (NYSEARCA:SPY) and Dow Jones Industrial Average (NYSEARCA:DIA) declines that started that same month.
A Hindenburg Omen also preceded a 30+% drop in the S&P 500 (NYSEARCA:SPY) in 1987.
The most recent cluster of 2013 follows a previous group of sightings that occurred on April 15th, May 29, June 4th and June 10th which adds further credence to the indicator according to students of the indicator.
The Hindenburg Omen must meet specific characteristics as defined in Wikipedia:
- The daily number of NYSE new 52 week highs and the daily number of new 52 week lows are both greater than or equal to 2.8 percent.
- The NYSE index is greater in value than it was 50 trading days ago.
- The McClellan Oscillator is negative on the same day.
- New 52 week highs cannot be more than twice the new 52 week lows
The Hindenburg Omen points to probabilities of various degree of downside moves, usually over the next 40 days: (Wikipedia)
77% chance of a 5% drop
41% chance of a panic sell off
24% chance of a major stock market crash
Furthermore, every stock market crash going back to 1985 was preceded by a Hindenburg Omen.
Only 8% of Hindenburg Omens have not resulted in at least mild declines in the Dow Jones Industrial Average (NYSEARCA:DIA) and S&P 500 (NYSEARCA:SPY)
Bottom line: The Hindenburg Omen is wildly controversial, however, many professional analysts and traders are paying attention to this group of occurrences as it’s an unusually concentrated cluster and is occurring in conjunction with other warning signals like high margin debt and heavy retail buying of stocks. Market participants will be watching for other confirming indicators of stock market weakness over the next 40 days.
he Hindenburg Omen is said to predict when the stock market is headed for a crash, and market experts say they’re seeing a lot of the ominous signs lately. The Hindenburg Omen is a combination of factors measuring the health of stocks traded on the New York Stock Exchange, and is triggered if a certain number of these stocks hit new highs and lows at the same time. The omen is said to predict when there is a high likelihood of a crash. That’s exactly what market experts have been seeing lately. “There have been multiple occurrences of the Hindenburg Omen in the last several weeks,” said Art Cashin, the director of floor operations at UBS, in his morning note. The omen was cited in 2007, when the housing market bubble was near its bursting point just before American economy would be thrown into turmoil. But the Hindenburg Omen does not necessarily mean a crash will happen, iSPYETF points out. Though the factors have sometimes lined up correctly to predict a market crash, there have been some other bad misses for the omen. But Jason Goepfert, an analyst with SentimenTrader, notes that the Hindenburg Omen seems stronger now than in many instances in the past. “With the latest market rally, the Omens are flaring up again,” he wrote. “There have been 5 Omens triggered out of the past 8 trading sessions (your data may vary-we’re using the same sources we’ve always used for historical data). That’s actually the closest-grouped cluster since early November 2007.” “It’s extremely rare to see as many Omens occurring together as we’ve seen over the past 50 days. The last time was prior to the bear market in 2007. The time before that was prior to the bear market in 2000.” Though market experts are still looking at the latest Hindenburg Omen with caution, they say they are heeding the warnings.
Read more at
http://www.inquisitr.com/902005/hindenburg-omen-could-signal-impending-stock-market-crash/#9bOwJysY6jGXA2E5.99he Hindenburg Omen is said to predict when the stock market is headed for a crash, and market experts say they’re seeing a lot of the ominous signs lately. The Hindenburg Omen is a combination of factors measuring the health of stocks traded on the New York Stock Exchange, and is triggered if a certain number of these stocks hit new highs and lows at the same time. The omen is said to predict when there is a high likelihood of a crash. That’s exactly what market experts have been seeing lately. “There have been multiple occurrences of the Hindenburg Omen in the last several weeks,” said Art Cashin, the director of floor operations at UBS, in his morning note. The omen was cited in 2007, when the housing market bubble was near its bursting point just before American economy would be thrown into turmoil. But the Hindenburg Omen does not necessarily mean a crash will happen, iSPYETF points out. Though the factors have sometimes lined up correctly to predict a market crash, there have been some other bad misses for the omen. But Jason Goepfert, an analyst with SentimenTrader, notes that the Hindenburg Omen seems stronger now than in many instances in the past. “With the latest market rally, the Omens are flaring up again,” he wrote. “There have been 5 Omens triggered out of the past 8 trading sessions (your data may vary-we’re using the same sources we’ve always used for historical data). That’s actually the closest-grouped cluster since early November 2007.” “It’s extremely rare to see as many Omens occurring together as we’ve seen over the past 50 days. The last time was prior to the bear market in 2007. The time before that was prior to the bear market in 2000.” Though market experts are still looking at the latest Hindenburg Omen with caution, they say they are heeding the warnings.
Read more at
http://www.inquisitr.com/902005/hindenburg-omen-could-signal-impending-stock-market-crash/#9bOwJysY6jGXA2E5.99he Hindenburg Omen is said to predict when the stock market is headed for a crash, and market experts say they’re seeing a lot of the ominous signs lately. The Hindenburg Omen is a combination of factors measuring the health of stocks traded on the New York Stock Exchange, and is triggered if a certain number of these stocks hit new highs and lows at the same time. The omen is said to predict when there is a high likelihood of a crash. That’s exactly what market experts have been seeing lately. “There have been multiple occurrences of the Hindenburg Omen in the last several weeks,” said Art Cashin, the director of floor operations at UBS, in his morning note. The omen was cited in 2007, when the housing market bubble was near its bursting point just before American economy would be thrown into turmoil. But the Hindenburg Omen does not necessarily mean a crash will happen, iSPYETF points out. Though the factors have sometimes lined up correctly to predict a market crash, there have been some other bad misses for the omen. But Jason Goepfert, an analyst with SentimenTrader, notes that the Hindenburg Omen seems stronger now than in many instances in the past. “With the latest market rally, the Omens are flaring up again,” he wrote. “There have been 5 Omens triggered out of the past 8 trading sessions (your data may vary-we’re using the same sources we’ve always used for historical data). That’s actually the closest-grouped cluster since early November 2007.” “It’s extremely rare to see as many Omens occurring together as we’ve seen over the past 50 days. The last time was prior to the bear market in 2007. The time before that was prior to the bear market in 2000.” Though market experts are still looking at the latest Hindenburg Omen with caution, they say they are heeding the warnings.
Read more at
http://www.inquisitr.com/902005/hindenburg-omen-could-signal-impending-stock-market-crash/#9bOwJysY6jGXA2E5.99he Hindenburg Omen is said to predict when the stock market is headed for a crash, and market experts say they’re seeing a lot of the ominous signs lately. The Hindenburg Omen is a combination of factors measuring the health of stocks traded on the New York Stock Exchange, and is triggered if a certain number of these stocks hit new highs and lows at the same time. The omen is said to predict when there is a high likelihood of a crash. That’s exactly what market experts have been seeing lately. “There have been multiple occurrences of the Hindenburg Omen in the last several weeks,” said Art Cashin, the director of floor operations at UBS, in his morning note. The omen was cited in 2007, when the housing market bubble was near its bursting point just before American economy would be thrown into turmoil. But the Hindenburg Omen does not necessarily mean a crash will happen, iSPYETF points out. Though the factors have sometimes lined up correctly to predict a market crash, there have been some other bad misses for the omen. But Jason Goepfert, an analyst with SentimenTrader, notes that the Hindenburg Omen seems stronger now than in many instances in the past. “With the latest market rally, the Omens are flaring up again,” he wrote. “There have been 5 Omens triggered out of the past 8 trading sessions (your data may vary-we’re using the same sources we’ve always used for historical data). That’s actually the closest-grouped cluster since early November 2007.” “It’s extremely rare to see as many Omens occurring together as we’ve seen over the past 50 days. The last time was prior to the bear market in 2007. The time before that was prior to the bear market in 2000.” Though market experts are still looking at the latest Hindenburg Omen with caution, they say they are heeding the warnings.
Read more at
http://www.inquisitr.com/902005/hindenburg-omen-could-signal-impending-stock-market-crash/#9bOwJysY6jGXA2E5.99Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
