Kelvin’s Reading of the STI vs Dreaded Hindenburg Omen
The Thrill of Hindenburg Omen
Hindenburg Omen is named after the Hindenburg disaster in May 1937 when German zeppelin LZ 129 Hindenburg suddenly caught fire and was destroyed. Today, Hindenburg has been used by some financial forecasters as a form of technical analysis that, when fulfilled, projects a greater likelihood of a stock market collapse.
Although the conditions for the Hindenburg Omen have been met previously without a subsequent stock market crash, there has never been an actual crash without it being preceded by a Hindenburg Omen.
The criteria of fullfilling Hindenburg Omen must satisfy all the conditions as below:
1. That the daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
2. That the smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
3. That the NYSE 10 Week moving average is rising.
4. That the McClellan Oscillator is negative on that same day.
5. That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs). This condition is absolutely mandatory.
This spooky omen came on the day prior to Friday the 13th during August 2010!
The American financial forecaster Gerald Celente, who has a proven track record in being accurate, told a radio show on Aug 14 (Saturday) that the stock market would crash before the end of 2010, appearing to confirm the worst consequences of the Hindenburg Omen.
Nevertheless, UBS Financial Services Director Art Cashin says that we’ll know within 3 or 4 weeks whether the dreaded Hindenburg Omen, a set of market factors that precede a stock market collapse, will unfold as many are now predicting.
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