Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

The Hindenburg Stock Market Omen Doomed to Crash and Burn?

News_Letter / Financial Markets 2010 Aug 26, 2010 - 03:01 AM GMT

By: NewsLetter

News_Letter The Market Oracle Newsletter
August 22nd, 2010 Issue #48 Vol. 4


The Market Oracle Newsletter
August 22nd, 2010            Issue #48 Vol. 4

Commodities Currencies Economics Housing Market Interest Rates Education Personal Finance Stocks / Financials Real Gems

The Hindenburg Stock Market Omen Doomed to Crash and Burn?

Inflation Mega-Trend Ebook Direct Download Link (PDF 3.2m/b)

Dear Reader

The dreaded Hindenburg Omen (HO) has been making the rounds in the mainstream press and BlogosFear for the past few weeks, which purportedly heralds an imminent stock market crash.

Hindenburg Seller: Market Oracle Checks Out - Barrons - 21st August 2010

ES MIEKKA, A BLIND ORACLE credited as the author of the Hindenburg Omen, a predictor of stock-market crashes that has been getting a lot of buzz, sold his stock positions last week.

The Omen was triggered Aug. 12, when new 52-week highs and lows exceeded 2.5% of issues traded on the New York Stock Exchange, the 50-day moving average rose and three other factors confirmed a confused market. It happened again on Friday, he says.

Hindenburg Omen' Indicator Suggests Slump in Stocks: Technical Analysis - Bloomberg - 13th August 2010

This week’s plunge in U.S. stocks triggered a technical indicator known as the Hindenburg Omen that may signal a more severe sell off, according to analysts who follow charts to predict market moves.

Dr Doom on stock markets, the Hindenburg Omen and what next - FT - 31st July 2010

“Normally a single signal is not of great significance, but when several signals occur within a short period of time, the odds for a stock market crash increase”, says Faber.

As of Tuesday, July 23, the Hindenburg signal had fired at least eight times over the previous six weeks. The Hindenburg Omen is the alignment of several technical factors that measure the underlying condition of the stock market and warns of either impending market crashes or severe declines.

Do you notice that the HO is apparently more common than the theory suggests it should be? Which implies that it is overly complicated and highly subjective rather than technical as illustrated by Marc Faber's comments of several Hindenburg events in July.

What Exactly is the Hindenburg Omen Indicator?

The criteria for the Hindenberg stock market crash omen are -

1. The Number of NYSE 52 week New Highs and Lows are both greater than 69

2. New highs cannot be more than double the new lows

3. Rising 10 Week NYSE Index Moving average

4. A negative Mcclellan Oscillator on the same day.

That the HO should be repeated within 36 hours to confirm a signal, else it is an unconfirmed HO.

This month (August 2010) has seen three occurrences of the HO, first on the 12th (unconfirmed HO), then on the 19th and again on the Friday the 20th with 83 New highs and 95 New lows thus confirming the HO and signaling an imminent crash.

My View - If you have been following my analysis / commentary for any length of time then you will know that I consider all individual tools, indicators and theories as no more reliable on their own than a coin toss i.e. a 50/50 probability, and therefore it should be the job of the analyst to pull all the threads together towards a arriving at a probable final conclusion.

The problem I see with the Hindenberg Omen and its kind is that it is too easy to generate a back fitting indicator that perfectly calls every top or bottom in hindsight but going forward requires constant revisions to make the indicator fit onto future price action, which basically means you have a 50/50 chance (or less) of the indicator going forward producing the outcome that it purports to forecast, as each time it fails the indicator is changed to allow for the reason as to why it failed which basically means fewer and fewer occurrences which does NOT mean that it becomes more accurate rather more accurately fitting the data in hindsight.

To effectively use the HO, it must be part of broader unbiased analysis as the biggest mistake analysts make is by attaching near certainty of outcome to an indicator that then clouds their judgement at arriving at a more probable conclusion. So the HO is no better or worse then any other technical indicator and should be treated as such rather then to be elevated to a level that generates headlines of imminent stock market doom. Given the fact that the HO's are rare this to me suggests that it is pretty much worthless as it does not allow for the build up of experience of using the indicator along with all other analysis on an going basis. It is infinitely better for analysts or traders to train themselves to use simple trendlines than waste time on tracking once in a blue moon indicators such as the HO.

Also remember that stock market crashes are extremely rare and near impossible to forecast events as illustrated by the long history of failure, remember October 2009? That was supposed to have witnessed a repeat of Black Monday that NEVER happened. Whilst the May 6th Flash Crash was missed by ALL.

The facts are that the main proponents of the Hindenburg Omen have been WRONG throughout the WHOLE Bull market from its birth in March 2009 and subsequent 18 month trend, the perma-bears each month jump from indicator to indicator (In June and July the Head and Shoulders pattern was all the rage) all the while hoping all the past investment account busting wrong calls have been forgotten as they wait to eventually be right, even a broken clock is right twice a day.

Stock Market Trend

Last weekends quick stock market analysis (15 Aug 2010 - Central Bankers Stoking the Inflation Fires, Whilst Academic Economists Worry about Deflation ) concluded in expectations for the Dow to target a trend towards 10,100 for a possible low after failing to hold 10,700. This week the Dow closed down at 10,213, and put in a fresh low at 10,147. Considering the prevailing HO bearishness of the past 48 hours which could have limited negative impact on the market next week, the Dow could now trade down into the 10,000 to 10,100 zone. I am looking at the chart and its not showing anything other than remaining within a tight corrective trading range of between 10,700 and 10,000.

The risks to the scenario remains of a break below 10k to target 9,614 low a break of which would imply a larger ABC pattern that targets a downtrend into October (current scenario is that the early July marked the ABC correction low to target 10,700 then 11,250). So unless I see a breakout form the tight range, I still don't see the point of taking the time to do an in-depth analysis at this point.

Pakistan Floods Crisis Worsens

The floods crisis in Pakistan has now put 20% of the country under water with the number of people affected expanding to 20 million from 14 million. The growing risk is that from the outbreak of water bourne diseases such as cholera that could see the death toll multiple into the tens of thousands unless urgent action is taken. Looking beyond the floods, Pakistan's already war and recession weakened economy lies in tatters that risks political and social instability which could spill over into neighbouring countries.

UK Donations

USA Donations

Your analyst.

Comments and Source: http://www.marketoracle.co.uk/Article22092.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Featured Analysis of the Week

PRESERVE and PROTECT Mapping the Financial Markets Tipping Points - 21st Aug 10 - Gordon_T_Long
Climate Change Scientists and Politicians Concocting the Consensus View - 21st Aug 10 - Andrew_G_Marshall
U.S. Military Intervention in Africa, The New Blueprint for Global Domination - 21st Aug 10 - Paul C. Wright

Deflation Report

The Myth of the Engineered Recession - 21st Aug 10 - Gary_North
Inflationary Catalysts Pushing Gold Stocks Higher - 20th Aug 10 - Joe Foster
Silver Seasonal Big Autumn Rally - 20th Aug 10 - Zeal_LLC
The U.S. Econonomies Future
Double Dip Recession Proof Stocks - 20th Aug 10 - Jason Simpkins
How Washington Should Handle the Bush Tax Cuts - 20th Aug 10 - Martin Hutchinson
America’s Healthcare Mafia Strikes Again - 20th Aug 10 - Mike_Stathis
Buy and Sell Gold On-line Securely
Protection From a Double-Dip Economic Recession Going Global - 19th Aug 10 - Jason Simpkins
U.S. Heading for Currency Destruction Debt Default Great Depression - 19th Aug 10 - Doug Casey
Are Stocks a Screaming Buy Relative to Bonds, or a False Premise ? - 18th Aug 10 - Mike_Shedlock
Stock Market Crash Report - FREE
Affording the Unemployed - 18th Aug 10 - J_M_Finegold_Catalan
Gold and Other Investor Protections Against a Double Dip Recession - 18th Aug 10 - Jason Simpkins
U.S. Bank Credit Increases a Healthy 8.3%, But One Month Does Not Make a Trend - 18th Aug 10 - Paul_L_Kasriel
Get Your Free 50-Page Download: The Ultimate Technical Analysis Handbook
Recession Batters State Budgets Which Could Slow Economic Recovery - 17th Aug 10 - Elizabeth McNichol
The Connection Between Debt and Money Under Fractional Reserve Banking - 16th Aug 10 - Robert_Murphy
Emerging Stock Markets Thrive as U.S. Shares Tumble - 16th Aug 10 - Jon D. Markman
Buy and Sell Gold On-line Securely
Stocks Distributing Into Weak Hands, Politicians With the Worst of Intentions - 16th Aug 10 - Steve_Betts
Time for a New, New Deal? - 15th Aug 10 - PhilStockWorld
Russian Wildfires Highlight the Global Population Growth-Food Supply Crisis - 15th Aug 10 - Matthew Weinschenk
U.S. Housing 10% Below Fundamentals, BubbleOmics Says Must Drop 15% More - 15th Aug 10 - Andrew_Butter
Stocks, Housing and Economy, Mass Delusion American Style - 14th Aug 10 - James_Quinn
Double Dip Recession, Keynesianism Is Dying - 14th Aug 10 - Gary_North

Most Popular Financial Markets Analysis of the Week :

1. U.S. Heading for Currency Destruction Debt Default Great Depression

By: Doug Casey

As the world sinks deeper into what he calls the Greater Depression, Casey Research Chairman Doug Casey sees default on the U.S. national debt as inevitable—albeit probably in the guise of currency destruction. He anticipates further contraction in real estate, particularly on the commercial front. As long as stocks remain overpriced, he'll shy away from equities—except perhaps in favored sectors such as gold. In fact, in this exclusive interview with The Gold Report, Doug posits that gold juniors might "go up by an order of magnitude or more, even while most other stocks are going down."

Read Article

2. Central Bankers Stoking the Inflation Fires, Whilst Academic Economists Worry about Deflation

By: Nadeem_Walayat

This week the Bank of England Governor Mervyn King realised that his attempts at talking inflation down have failed and that now 8 months on he is looking rather foolish by continually stating that high inflation is just temporary, where even the mainstream press that had been lapping up the mantra are now no longer taking him seriously, so now the Governor is suggesting that inflation will remain above the 2% target level for the whole of 2011 (current CPI 3.2%, RPI 5%) which translates into watch for UK CPI to go above 4% and and RPI above 6% during 2011, in line with my expectations since early May.

Read Article

3. Time for a New, New Deal?

By: PhilStockWorld

What are people thinking?
It is interesting to see so many of the same people calling for a "double dip" recession while at the same time railing against government spending.  The US Government is spending $3.5Tn this year.  Admittedly that's $1.5Tn more than they have, but it's quite a lot of money no matter how you look at it.  Conservative, born-again deficit hawks (they were born-again the day Obama was elected) will tell you the solution is to cut taxes and let corporations trickle their wealth down on the bottom 99%, well over 20% of whom are unemployed or under-employed.

Read Article

The U.S. Econonomies Future

4. Stock Market to Plunge to Below Dow 9000 by November 2010

By: Larry_Edelson

My apologies for being so bold in the subject line. But this is one of the most important columns I’ve ever written. Why? Because today I am going to give you a major heads up on the trends I see unfolding over the next few months.

Read Article

5. The Connection Between Debt and Money Under Fractional Reserve Banking

By: Robert_Murphy

Is Our Money Based on Debt?

Different groups often notice different aspects of the same phenomenon — this is the point of the famous tale of the blind men encountering an elephant. When it comes to the Federal Reserve, Austrians usually focus on how its tinkering with interest rates leads to the boom–bust cycle.

Read Article

6. Protection From a Double-Dip Economic Recession Going Global

By: Jason Simpkins

The last time the U.S. economy suffered through a double-dip recession, this country was struggling to overcome the fallout from an Arab oil embargo, Vietnam War-era deficits, and an inflationary spiral that just wouldn't let go.

That 1981-82 double-dip downturn - the result of an economic "shock treatment" aimed at curing those ills - consisted of two recessions that were separated by a single quarter of growth.

Read Article

7. U.S. Housing 10% Below Fundamentals, BubbleOmics Says Must Drop 15% More

By: Andrew_Butter

From Felix Salmon today: The government does need to get the housing market going, because the alternative is unthinkable: if the government just kicked away the housing market’s multi-trillion-dollar scaffolding overnight, as Santelli suggests it should, then the entire banking system would become insolvent, and we’d soon be reminiscing wistfully about how painless and shallow the 2008 financial crisis was, compared to the one of 2011

Read Article

8. Stocks Distributing Into Weak Hands, Politicians With the Worst of Intentions

By: Steve_Betts

Ancient Rome declined because it had a Senate, now what's going to happen to us with both a House and a Senate? - by Will Rogers, humorist

Housing foreclosures hit new highs last month as the hangover from the housing bubble continues. It is estimated that 32% of all mortgages now have negative equity, meaning the debt on the house exceeds the value of the house. So here’s a question: if you bought a house for US $400,000, you have a mortgage on it for $350,000, and it’s worth US$ 225,000, what is the proper business decision to make? I’m not talking about the moral dilemma here; I am simply looking at it as a business decision.

Read Article

Subscription

You're receiving this Email because you've registered with our website.

How to Subscribe

Click here to register and get our FREE Newsletter

To access the Newsletter archive this link

Forward a Message to Someone [FORWARD]

To update your preferences [PREFERENCES]

How to Unsubscribe - [UNSUBSCRIBE]

About: The Market Oracle Newsletter

The Market Oracle is a FREE Financial Markets Forecasting & Analysis Newsletter and online publication.
(c) 2005-2010 MarketOracle.co.uk (Market Oracle Ltd) - The Market Oracle asserts copyright on all articles authored by our editorial team. Any and all information provided within this newsletter is for general information purposes only and Market Oracle do not warrant the accuracy, timeliness or suitability of any information provided in this newsletter. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We recommend that independent professional advice is obtained before you make any investment or trading decisions. ( Market Oracle Ltd , Registered in England and Wales, Company no 6387055. Registered office: 226 Darnall Road, Sheffield S9 5AN , UK )

Terms of Use | Privacy Policy

Copyright 2010 MarketOracle.co.uk

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules