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hindenburg omen (2)

Rajjpuut's Folly: Hindenburg Omen’s Kaput? HO HO HO, Be Careful, Anyway!

Posted by Bob VanDeHey on September 17, 2010 at 5:19am

It can be a lot like watching the night sky for comets . . . . The New York Stock exchange has apparently ceased and desisted creation and emission of any more Hindenburg Omens for the time being . . . ah, shucks! If the rare but often portentous Hindenburg Omens are “up to snuff” expect a serious stock market drop by the day before Rajjpuut’s birthday (of course, they are purported to have “called market crashes as far as four months in the future –so who knows?) which means Friday, October 15, 2010. But hold on a minute, now, just like that, it’s cancelled, like some school day fire drill? Oh, hell, it’s just too confusing to be understood! For those of you who like to delve into such things deeply:

http://en.wikipedia.org/wiki/Hindenburg_Omen

http://stockcharts.com/charts/indices/McSumNYSE.html

The Hindenburg Omen is a so-called “technical indicator” which occurs very infrequently but which has had more than routine success in calling market drops of 5% or better and even stock market crashes. Technical data has nothing to do with economic reality and the underlying fundamentals of individual companies or the entire market, but only with everyday stock market variations in prices and volume; and patterns of highs; lows; volatility changes; moving averages; etc. The precise HO triggers are moderately complicated and seem to indicate a stock market that’s lost its way, becomes undecided whether to climb or fall . . . (see the web link above) and finally surrenders to at least a mild downward paroxysm; our recent New York Stock Exchange HO history reads like this:

8/11/2010 Witnessed a “near HO” event.

8/12/2010 Triggered a “real Hindenburg Omen” a preliminary signal which means nothing yet . . . .

8/13/2010 Friday the 13th saw another “near HO” event.

8/19/2010 Saw another “near HO” event.

8/20/2010 Triggered the Hindenburg Omen confirmation necessary to indicate the pattern is “demanding extreme caution!”

8/24/2010 Triggered another Hindenburg Omen confirmation, but wait, the 10-week moving average of stocks has begun to fall so make that a “false-confirmation” shucky-ding-dong-darn!

8/25/2010 Triggered the 3rd HO confirmation, but wait, the 10-week moving average of stocks has begun to fall so make that a second “false-confirmation” gee-whilikers!

8/31/2010 Triggered the 4th HO Confirmation, but wait, the 10-week moving average of stocks has begun to fall so make that a third “false-confirmation” doggone it!

9/5/2010 through 9/16/2010 The McClellan Oscillator which had been negative for some time, turned positive which “negates” the validity of any possible new HO signals and “cancels out” the validity of all the August, 2010 signals???? It NEVER HAPPENED! Talk about a lot of hooey!

Well, so much for the Hindenburg Omen which now “officially never happened.” But now as everybody starting today finds out about this from official channels such as the Wall Street Journal expect a brief surge in prices and buyer confidence and, of course, that’s when Ol’ Rajjpuut (ever the contrarian) would say is the time to be most careful. But rather than the HO HO HO Hindenburg Omen, the next stock market crash, should it come, will have to get predicted by some other portents. Let's see the New York Stock Exchange was born May 17, 1792 under the buttonwood tree in NYC at 7:52 a.m. which means it's a Taurus (the bull! one might suppose that Leo the lion is as close as the signs get to being an actual bear!) Oh, forget it . . . . Good luck.

Ya’all live long, strong and ornery,

Rajjpuut

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Rajjpuut's Folly: Two Near and Two Real Hindenburg Omens Threaten Stocks

Posted by Bob VanDeHey on August 26, 2010 at 1:00pm

First a full disclosure, Rajjpuut has recently run a blog saying that we are already in a double-dip recession . . . he may be considered “ highly prejudiced” on this matter . . . .
Confirmed Double-Hindenburg Omens

Suggest 'Iffy' Stock Market
Those of you with Yahoo.com e-mail addresses today probably read a very poorly researched article re-written badly from the original Wall Street Journal story by yahoo finance . . . .
about the so-called Hindenburg Omen which may be of interest to those of you with IRAs or money in the stock market. The article is false in about six of its key statements. To understand the Hindenburg Omen, let Rajjpuut help you out:
Strong stock pickers and so-called expert analysts tend to belong to two different camps. "Fundamentalists" look deeply into the accounting data from a business with particular interest in stocks as long-term investments. "Technicians," on the other hand, don’t care about business fundamentals, but instead look at the recent price and volume history etc. of a company’s stock in daily trading and tend to be most interested in short- or mid-term investments. The best selections as you can imagine usually come from those who combine both approaches.

Getting down to brass tacks, the Hindenburg Omen is a technical indicator which purports to give advanced warnings about stock market declines and even severe stock market crashes. Here’s where you can find a lot more detail on the HO and a much more accurate picture of exactly what HO is:
The creator of the Hindenburg Omen, a blind mathematics professor named Jim Miekka says he expects a 20% “correction” this fall, but sometimes the HO occurs and drops of a mere 4-5% follow, it's definitely not perfect.
In any case, all that being said, here’s the truth you need to know:
A. On Wednesday, August 11th there was a near Hindenburg Omen occurrence on the New York Stock Exchange (had two more of the NYSE stocks reached new lows that day a true HO would have occurred.
B. The very next day Thursday, August 12th, a true Hindenburg Omen occurred which is not considered very serious except in consideration of the near miss the day before.
C. A week ago, Thursday, August 19th, another near HO occurrence was spotted.
D. The very next day, last Friday, August 20th, a second true Hindenburg Omen occurred just eight days after the first. This combination of two Hindenburg Omens within a ten-day period is fairly rare and almost always indicates a drop in the stop market of at least 5% and on frequent occasions predicts drops of such magnitude that they earn the name CRASHES.
You now have all the information you need to begin thinking of what to do about your own investments. Were Rajjpuut (who's already told you he believes we're now in a double-dip recession and is therefore prejudiced in this matter) in the stock market advisor biz he’d presumably say, sell your stocks other than utilities and immediately buy a mutual fund equivalent to either the Franklin Funds or Fidelity Funds gold fund; or precious metals fund; or oil fund; or energy fund; or some combination of these funds. You can find similar "commodities-style" mutual funds to Franklin or Fidelity from at least 20 other reputable fund families. On the other hand doubters, especially serious fundamentalist doubters, of technical analysis, like presumably Warren Buffet, typically believe in buying and holding "strong stocks" regardless of recent market action.

Obviously, the decision is yours only, but now you know a bit more about the Hindenburg Omen. Do read the Wikipedia article before making any decisions and think carefully about your decision. Good luck, with your investments.
Ya’all live long, strong and ornery,
Rajjpuut
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