The Omen, named after the famous German airship in 1937 that crashed in Lakehurst, N.J., is a technical indicator that foreshadows not just a bear market but a stock-market crash [bold added]. Its creator, a blind mathematician named Jim Miekka, said his indicator is now predicting a market meltdown in September.According to the WSJ the Hindenburg Omen criteria are the following:
The Hindenburg Omen formulas seem like a black box, if not black magic, to me. The trouble is, the HO does confirm another stock market warning sign that I like to track.
The daily number of new NYSE 52-week highs and the daily number of new 52-week lows must both be greater than 2.5% of the total issues traded that day.
The smaller of the 52-week highs and lows must be greater than or equal to 79 (or 2.5% of 3,168 issues).
The NYSE's 10-week moving average must be rising.
The McClellan Oscillator, a measure of market fluctuations, must be negative.
New 52-week highs can't be more than twice the new 52-week lows. (However, it is acceptable for the new 52-week lows to be more than double the 52-week highs.)
|The skirts are falling! The skirts are falling!|
Despite the ominous omen, I'm hoping that the August heat wave will trigger a bounce in hemlines and share prices. In other words I'm hoping to see a bottom soon.