We Get An Official Confirmed Hindenburg Omen On July 24th, 2012 [SafeHavens]
July 30, 2012 Leave a comment
So what is a Hindenburg Omen? It is the alignment of several technical factors that measure the underlying condition of the stock market — specifically the NYSE — such that the probability that a stock market crash occurs is higher than normal, and the probability of a severe decline is quite high. This Omen has appeared before all of the stock market crashes, or panic events, of the past 25 years except one, except the mini-crash of July/August 2011.Except for that one crash, no stock market crash (a decline greater than 15 percent) occurred over the past 25 years without the presence of a Hindenburg Omen. Another way of looking at it is, without a confirmed Hindenburg Omen, we are pretty safe. But if we have an official Hindenburg Omen, a critical set of market conditions necessary for a stock market crash exists. As of July 24th, 2012, we have such a condition in the market, as we have an official new Hindenburg Omen.
We are taking this Omen seriously as it is coming around the same time that a Jaws of Death stock market pattern is finishing, a pattern that has occurred over two decades, a huge pattern. As a side note, Gold has sometimes done well during stock market crashes. The July/August 2011 stock market crash saw stocks fall 15 percent. At the same time Gold rose 17 percent.
We got a first Hindenburg Omen observation on Monday, July 23rd, 2012, and a second official confirmed Hindenburg Omen observation Tuesday, July 24th, 2012, meaning we are now on the clock watching for a stock market crash, and at the very least a significant decline. There is a much higher-than-random probability of a stock market crash starting sometime over the next four months. All criteria were met Monday and Tuesday, July 23rd and 24th, 2012, with a third consecutive observation coming again on July 25th. July 23rd’s observation saw 100 NYSE New 52 Week Highs, and 94 NYSE New 52 Week Lows according to the Wall Street Journal, the lower of the two coming in at 2.99 percent, above the 2.2 percent threshold required for a Hindenburg Omen observation. Total NYSE issues traded were 3,145. New Highs were not more than twice New Lows, the McClellan Oscillator was negative at negative -86.47, and the 10 Week Moving Average was higher than it was several months ago. The second observation on July 24th, 2012 has occurred within the required 36 day period necessary for a cluster (two or more observations) to occur. Tuesday July 24th’s observation saw 105 NYSE New 52 Week Highs, and 99 NYSE New 52 Week Lows according to the Wall Street Journal, the lower of the two coming in at 3.16 percent, above the 2.2 percent threshold required for a Hindenburg Omen observation. Total NYSE issues traded were 3,135. New Highs were not more than twice New Lows, the McClellan Oscillator was negative at negative -156.78, and the 10 Week Moving Average was higher than it was several months ago.
Now that we have a second observation, we have an official confirmed Hindenburg Omen. This is the first Hindenburg Omen since December 2010, and only the third since 2008, which of course led to the massive stock market crash in the autumn 2008, and the fifth since the Bear Market started in 2007 (we got one in 2007, one in 2008 and two in 2010, and now one in 2012). We got crashes after both the October 2007 and June 2008 Hindenburg Omens.