Yes Folks, Hindenburg Omen Tripped Again

The Hindenburg Omen reared its ugly head late last week, signaling more doom and gloom as stocks plod along amid the dog days of summer.

http://blogs.wsj.com/marketbeat/2010/08/23/yes-folks-hindenburg-omen-tripped-again/

The Omen, a technical indicator which uses a plethora of data to foreshadow a , was tripped again on Friday, marking the second time since Aug. 12 it has occurred. (It also came close on Thursday, but one of its criteria fell short.)

The latest trigger has prompted the Omen’s creator, Jim Miekka, to exit the market. “I’m taking it seriously and I’m fully out of the market now,” Miekka, a blind mathematician, said in a telephone interview from his home in Surry, Maine. “I would’ve probably stayed in until the beginning of September,” depending on how the indicators varied. “That was my basic plan, until the Hindenburg came along.”

The Omen has been behind every market crash since 1987, but significant stock-market declines have followed only 25% of the time. So there’s a high likelihood that the Omen could be nothing more than a false signal.

But that isn’t stopping Miekka from taking any chances, especially as September, typically the market’s worst-performing month, sits only one week away.
more:
http://blogs.wsj.com/marketbeat/2010/08/23/yes-folks-hindenburg-omen-tripped-again/

the Hindenburg Omen

NEW YORK (TheStreet) -- It may just be the summer doldrums, or the ominous occurrence of a Friday the 13 in mid-August, but the Hindenburg Omen -- a technical indicator of an impending stock market crash -- is suddenly as important a market mover as testimony from Federal Reserve chairman Ben Bernanke.

http://www.thestreet.com/story/10835851/1/hindenburg-omen-is-a-stock-market-crash-imminent.html

The blog Zero Hedge, writing in a vein that seems made for professional boxing or WWE pay-per-view event hype, describes the Hindenburg Omen as "Easily the most feared technical pattern in all of chartism (for the bullishly inclined). Those who know what it is, tend to have an atavistic reaction to its mere mention."

In case you hadn't heard, Thursday's action on the New York Stock Exchange registered a technical anomaly known as the Hindenburg Omen. Read: just like the doomed German airship, the markets are fated to crash and burn. Still worse, Wednesday's trading action almost sparked Hindenburg Omen conditions. It takes two Hindenburg Omen trading days within a 36 day window to trigger the end of life in the markets as we know it.

Writing on RealMoney.com, Rev Shark notes of the market voodoo that "the logic behind this ominous-sounding indicator is this: When there are internal inconsistencies in the market that are causing a simultaneously high level of new highs and new lows, a greater risk exists that the resulting confusion and uncertainty will cause market players to exit... When the herd is confused and moving in two different directions, internally that is going to cause some problems."

But first the facts. There was a correction in the markets this week, and the sell-off triggered the Hindenburg conditions. The Hindenburg Omen occurs when an unusually high number of companies in the New York Stock Exchange reach 52-week highs and lows at the same time. The proportion of NYSE stock highs and lows must both exceed 2.2% of the total listed on the exchange. The Hindenburg Omen last occurred in October 2008, according to UBS data.

http://www.thestreet.com/story/10835851/1/hindenburg-omen-is-a-stock-market-crash-imminent.html