VIDEO: The Case Against the Hindenburg Omen

Posted on by Jason Leavitt

The Hindenberg Omen supposedly triggered at the end of last week. Here’s why I think it’s ridiculous to pay any attention to it.




0 thoughts on “VIDEO: The Case Against the Hindenburg Omen”

  1. I’am not familiar with the ‘Hindenburg Omen’ so I looked it up and according to ChartSchool glossary, it was created by James Miekka and the indicator warns of potential weakness in the stock market. There are 3 criteria to activate the omen. 1st.,NYSE new highs and new lows must both be more than 2.8% of advances,plus declines.2nd, the NY composite is above the level it was 50 days ago.3rd., the number of new highs cannot be more than double the number of new lows. The activation period is good for 30 days. Once active, a sell signal is triggered when the McClellan Oscillator moves below zero and negated when the McClellan Oscillator moves back above zero.
    I’am not sure if such combination of indicators is relevant but what I do notice is that the market does seem to be in exhaustive mode and your assessment of the SP500 vs NYAD index vs NYHGH vs NYLOW made pretty good sense and a useful visual tool. Overall I’am paying attention for additional signs of technical weakness. Thanks for sharing the info. –

  2. Jason
    I agree with your reasoning. I do think we are in for a correction just from reading the charts and the law of averages. I do agree with your state of the market video of this weekend. Tops are hard to call. I am still a little surprised what the market has done this year. Often when the market has gone straight up for 6-7 months there is a significant correction. To me it feels like Spring of 2000.
    Paul

  4. Jason, you are 100% right, it doesn’t work the way the “Hindenburg boys” are using it. The non stock issues are distorting the signal.
    It does work quite well though if you calculate the signal (Miekka hi low signal) on “stocks only” the way Miekka developed it. I use Russell 3000 since it is broad and clean.
    A cluster of signals (not single signals) are then probably one of the better “warning of a major top” there is.
    Last major clusters was around the 2007 top. One cluster june/july 2007 and the next october/november of 2007.
    Before that there was one cluster december of 1999 and one in april/may of 2000.
    There was also one cluster in april 1999 which can be considered false (or way early).
    But not to shabby in my opinion 😉
    There are currently no signals.

  5. the original hindenberg was full of hot air,caught fire and burnt
    this ponsi hot air criminal central bank created fantasy market is no different
    the ammount of demand ,buying power ,now needed to keep the market up is increasingly
    becomeing impossible AND ALL MARKETS WILL BURN AND CRASH TO ZERO
    and uncle ben off to jail for treason as well as his big bank owners
    and thats my rant
    elliot wavist mchugh also had input in creating the hot air ship–see his web site –technical indicators–i call him mcgoo but i think his name is bill mchugh

  6. You made a good point that I hadn’t considered, but I was also going to add that if the signal is statistically significant then it’s worth considering…. The point regarding reverse ETF’s etc. is true every day and yet the market is not generating omen signals every day during a strong rally. It was prescient in 2007 and I’ll be keeping track of whether or not it is prescient now.
    Cheers,
    Stuart

    1. Stuart…the part about the new highs and new lows is only one of at least four criteria that need to be met. I don’t follow the Omen, but I’d imagine in the past when new highs and new lows spiked up at the same time, the other criteria were not in place. Just a guess.

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