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Investors beware, the 'Hindenburg Omen' has reappeared
Perhaps the clue is in today’s date, Friday 13, but equity investors should be very afraid if the reappearance of a US technical indicator believed to herald an imminent market crash is to be believed.
Markets
Perhaps the clue is in today’s date, Friday 13, but equity investors should be very afraid if the reappearance of a US technical indicator believed to herald an imminent market crash is to be believed.
The ‘Hindenburg Omen’ is the ominously-titled list of five separate indicators linked to the New York Stock Exchange which when they occur at the same time, have historically warned of an impending crash.
Named after the tragic events of 1937 when the zeppelin airship Hindenburg dramatically exploded into flames in New Jersey, influential US market blog Zero Hedge reported overnight that the five technical indicators appeared to have occurred last Tuesday.
In fact Zero Hedge 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.'
What is it?
The Hindenburg Omen describes when the daily number of New York Stock Exchange–listed year highs and the daily number of 52 week lows both exceed 2.2% of all the issues traded.
On 10 August, trading in new highs and new lows both exceeded that level.
So what you might say. But the Hindenburg Omen has apparently been present just prior to all of the market corrections or sell offs of the last 25 years.
Apparently the last time the phenomenon occurred was twice in June 2008, and once a month later. We all know what happened to the stock market that Autumn.
The Hindenburg Omen factors in full are:
1) That the daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
2) That the smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126)
3) That the NYSE 10 Week moving average is rising.
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30 comments so far. Why not have your say?
alessandra grigio
Aug 13, 2010 at 16:08
Cheer me up why don't you??!!
report thisJohn Coles
Aug 13, 2010 at 16:09
.......AND that pigs are seen flying backwards over the NYSE.
report thismetin mentesh
Aug 13, 2010 at 16:11
and doing a flip at the same time
report thisLindsay Morrison
Aug 13, 2010 at 16:11
what a lot of nonsense - get a life whoever wasted their life on this c**p
report thisPat Murphy
Aug 13, 2010 at 16:14
Who wastes their time writing this drivel....article states that the Factor 5 conditions (" absolute neccessity in all cases") have only nearly been met recently , never mind that they must repeat upto 5 times within 36 days ....normal article for the silly season I think.
report thisMe Me
Aug 13, 2010 at 16:17
crap
report thisstormdog
Aug 13, 2010 at 16:20
Yeah! But how many times has it appeared without a subsequent market crash?
report thisLindsay Morrison
Aug 13, 2010 at 16:21
.....and I just sold everything I had in response to this report....never mind the FSA will compensate me for my losses I'm sure.. Ho Ho Ho from the cash pile
report thisFreda
Aug 13, 2010 at 16:23
'Easily the most feared technical pattern in all of chartism (for the bullishly inclined).
Bullish or Bullsh__ was that?
report thisjeff lampert
Aug 13, 2010 at 16:24
If you believe Chartism is tracking human nature (which creates the movements which make the Chart) you ignore it at your peril.
However I have to agree this one does seem to be a little far out!
report thisGeoff B.
Aug 13, 2010 at 16:27
Problem is that - however nonsensical it appears - the prediction will come true if enough idiots believe it & start selling their stock.
report thisjoe stalin
Aug 13, 2010 at 16:52
Fridays always a good day for the market pick-pockets. Fridays in August even better as the whole of the FSA is away on their annual busmen's holiday. Hindenburg formation nothing compared to the Krakatoa cross.
report thisGraham Willows
Aug 13, 2010 at 16:57
Not April 1st. is it ?
report thisDreckly
Aug 13, 2010 at 16:59
According to Citywire's "About Us" page
"Our goal
We aim to be the independent guide to your financial life. We want to help you make the best decisions about what to do with your money – whether it’s making sure your family is financially protected or navigating the pensions minefield."
Does make you wonder therefore which articles they rejected before choosing this 'gem'.
report thisArborbridge
Aug 13, 2010 at 17:02
I take notice of charts and doing this has saved me some aggro in the past. This, however, is just too bizarre! Didn't someone relate stock market crashes to the solar cycle? - may as well through that one in as well.
report thisRaviP37
Aug 13, 2010 at 17:12
Indians have been criticized for being superstitious but here I find people in the West too are superstitious.
report thisLionel Smith
Aug 13, 2010 at 17:47
''and that the the subsequent market collapse has to happen within a 120 day time frame.''
I don't want to nitpick such a fine piece of research,, but doesn't that last line mean if it nothing happens within 120 days, then the whole thing is a load of tosh??
report thisKeith Wilby
Aug 13, 2010 at 18:00
you have forgottento take account of the inside leg measurement of the analyst (in inches) which must be identical to his hat size and his IQ
report thistony levene
Aug 13, 2010 at 18:03
If this really works, then everyone will sell, I'll buy at the bottom and clean up. No indicator is guaranteed to work forever - remember the January effect?
This sounds so convoluted that there are probably another 20 five-level indicators that prove this or anything else. Still, it has increased my vocabulary - I shall now be able to bore for Britain on the McClennan Oscillator.
report thisHotrod
Aug 13, 2010 at 18:23
On Tuesday 10th August I entrusted three pairs of brand new trousers, which I wanted shortening, to a woman I had never met before. She asked for (demanded) cash in advance as she said she had been left with garments she had spent time altering which customers had failed to collect.
Today (Friday 13th) I gave all my old trousers to a charity collector who happened to call before I was due to fetch my new ones. All I was left with was a few pairs of jeans.
Later this morning I visited the lady as agreed. She had kept her word, the work was done, and all I had to do was say thank you.
I brought the new trousers home, inspected then carefully, and tried them on for size. They fit me perfectly now, and you cannot see that they have ever been altered.
I'm well chuffed. So far this Friday 13th has turned out well. Sometimes you just have to follow your gut instinct and take a chance.
report thisTony.G.
Aug 13, 2010 at 19:04
N0t one of you silly persons beleive the above ,so perhaps that makes me a
silly billy too.
report thisJames Bond
Aug 13, 2010 at 19:04
Hi gamblers,
This Hindenburg lark is a real gloom, doom and OH THE HUMANITY boom feature. No worries everything will be OK as they now use Helium. So stick with it even if today was a down day but an up week for me.
If you want to see more on airships, past, present and future see: www.airshipblimp.com or if you just want a helium sniffing laugh try www.airship.me the worlds only lighter than air comedy site, with lots of funny pictures and U tube links fit for all the family.
Regards Bond, James Bond.
(Skyship blimp pilot in a View to a Kill)
PS. For the star of a future James Bond film see the Skycat: www.hybridairvehicles.com
report thisColin Lusk
Aug 13, 2010 at 21:45
i heard a two-headed lamb was born in shrewsbury. and it had two bodies. and two tails. and eight legs. the end is nigh, i tell you!
report thisTerence Brown
Aug 14, 2010 at 09:57
Oh yeah? Of course it's true - and if your auntie had balls she'd be your uncle as well!!
report thisClive Oram
Aug 14, 2010 at 16:25
This article scared me so much I went outside immediately to check my piece of seaweed - don't worry folks, it was still wet!
report thisD. WRIGHT
Aug 14, 2010 at 17:59
They forgot to divide 36 by the square root of minus 3 so it wilol be a bull run certainty.
report thisan elder one
Aug 14, 2010 at 23:02
I think all the previous have covered the matter adequately, so I've nothing to add., expect to say to Jeff Lampert that sentiment is borne generally behind the curve and people come to their senses eventually.
report thisNICK GREENWOOD
Aug 15, 2010 at 12:43
James Bond - I doubt you'll ever see this, but The View To a Kill project was my first commercial contract when I worked for Airship Industries - great fun, great days. Negotiated the contract at Pinewood with Eon Productions and not with Cubby Brocolli, but with his daughter, who behind the scenes did all the commercial work...
A to the Hindenburg Omen - naive, non-believers - ignore it at your peril.
report thisIan Grumpy
Aug 16, 2010 at 10:22
...eye of newt and toe of frog....
what a load of b******s.
report thisSwiss Gnome
Aug 16, 2010 at 15:45
This is like the square of bugger all theory, which ever way you read it it still is ZERO!
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