Hindenburg Omen Looming Over Wall Street Says Analysts
The Hindenburg Omen is said to be looming over Wall Street. Here is the latest research findings from SentimenTrader’s Jason Goepfert:
Sometimes a topic in the market takes hold and it’s hard to shake it off. One of those is the technical “market crash” signal called the Hindenburg Omen. It has its boosters and its detractors, and we’re not going to get caught up in debating its merits. We’ve discussed it for 12 years, always with the same arguments. On June 10th, we outlined the market’s historical performance after suffering at least 5 signals from the Hindenburg Omen within a two-week period. Stocks were consistently weak afterward, and proved to be so again, at least for a while.
With the latest market rally, the Omens are flaring up again.There have been 5 Omens triggered out of the past 8 trading sessions (your data may vary—we’re using the same sources we’ve always used for historical data). That’s actually the closest-grouped cluster since early November 2007. It’s extremely rare to see as many Omens occurring together as we’ve seen over the past 50 days. The last time was prior to the bear market in 2007.
The time before that was prior to the bear market in 2000.
Market veteran Art Cashin said Monday that the market phenomenon is looming again, “There have been multiple occurrences of the Hindenburg Omen in the last several weeks.”
What is The Hindenburg Omen
The Hindenburg Omen is a technical analysis pattern that is said to portend a stock market crash. It is named after the Hindenburg disaster of May 6, 1937, in which the Zeppelin airship Hindenburg crashed and burned.
The Hindenburg Omen is a combination of technical factors that attempt to measure the health of the NYSE, and by extension, the stock market as a whole. The goal of the indicator is to signal increased probability of a stock market crash.
The rationale is that under “normal conditions” a substantial number of stocks may set either new annual highs or new annual lows, but not both at the same time. As a healthy market possesses a degree of uniformity, whether up or down, the simultaneous presence of many new highs and lows may signal trouble.
Theoretically, the Hindenburg Omen could be applied to any stock exchange. However, some minor alterations to the omen might be needed to achieve similar results.