“Hindenburg Omen” Indicator Suggests Imminent Market Decline

The Hindenburg Omen is a technical indicator that foreshadows not just a bear market but the likelihood of a stock-market crash – and it is now predicting a possible market meltdown in September! Words: 836

So say Steven Russolillo and Tomi Kilgore in an http://online.wsj.com article* entitled “Hindenburg Omen’ Flashes.” Below Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, presents further reformatted and edited [..] excerpts from the article for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) They go on to say:

The Origin of the Hindenberg Omen
Jim Miekka, a blind mathematician, came up with the “Omen” in 1995 as a way to predict big market downturns, developing a formula that parses data like 52-week stock levels and the moving averages of the New York Stock Exchange. The name “Hindenburg Omen” (named after the famous German airship that crashed in Lakehurst, N.J. in 1937) was coined by a fellow market technician, Kennedy Gammage, when he and Miekka found out the name “Titanic” already had been taken. Miekka currently writes a Wall Street newsletter called the “Sudbury Bull & Bear Report”.

The Implications of the Hindenberg Omen Occurring
The Hindenburg Omen occurs when a number of technical indicators align on the NYSE and has been behind every market crash since 1987. Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77% [conversely, 23% of the time no significant market downturn occurred] and usually took place within the next forty-days. The probability of a panic sellout was 41% and the probability of a major stock market crash was 24%. The Omen was activated on the New York Stock Exchange on August 11 so the probability is that…. (To continue reading the article please go here.)

*http://online.wsj.com/article/SB10001424052748703321004575427791421316112.html?mod=rss_markets_main

Editor’s Note:
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The authors’ views and conclusions are unaltered.
– Permission to reprint in whole or in part is permitted provided full credit is given.