Thursday, 26 August 2010

Hindenburg Omen on Stock Markets

Stock Trading Tips - Stock Market Hindenburg Omen ?

There is talk again of the Hindenburg Omen on the stock markets. It was first mentioned a couple of weeks ago and it appears that it has now occurred again. It is one of the conditions of the Hindenburg Omen that it should appear twice within 36 days.

It has been described as the
"most feared technical pattern in all of chartism"
..... and is an omen of bad things to come. It gets its name from the Hindenburg airship that crashed so dramatically in 1937.

There are five criteria required for the Hindenburg Omen to be formed.

  1. On the New York Stock Exchange the daily number of new 52 Week Highs and also the daily number of new 52 Week Lows must be above 2.2% of total NYSE trades that day.
  2. The smaller of these two figures must be greater than or equal to 69. Not an absolute requirement more of a checksum.
  3. The 10 Week moving average must be heading up.
  4. The McClellan Oscillator must be negative on the day.
  5. Finally, an absolutely essential conditions is that the new 52 Week Highs must not be more than twice the new 52 Week Lows.
All five criteria have been met twice now. Some say this suggest a “a savage downturn is imminent in stocks"

The person who came up with the Hindenburg Omen, mathematician Jim Miekka, says he believes it is like a funnel cloud just before a tornado.
"It doesn't mean [the market's] going to crash, but it's a high probability."
He also says he is now entirely out of the stock market.

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