Are you ready for the next stock-market crash of the century? The Hindenburg Omen was spotted by eagle eyes on April 15th. It was confirmed by a sighting on May 29th. That gives us 40 days approximately before the market takes a plunge (apparently). That’s enough to spark fears on the market that we are in for a shaky time, but are those fears really justified and will the market plunge as the Hindenburg Omen predicts?
The Hindenburg is a technical analysis pattern that predicts highs and lows of the stock market based upon Norman G. Fosback’s High Low Logic Index (HLLI). It was invented by Jim Miekka in 1995. It’s used as a way of predicting big turndowns.
The Hindenburg has to meet four criteria and it is calculated using Wall Street Journal figures daily.
1. The sum of new 52-week highs and the sum of new 52-week lows must be equal or greater to 2.8% of the sum of NYSE issues advancing or declining on any given day.
2. NYSE must be greater in terms of value than it was 50 days beforehand.
3. The McClellan Oscillator (money entering and leaving the market) must be negative on that day also (in other words, below zero equals a bearish market).
4. The 52-week highs must not be more than twice the 52-week lows (but the opposite does not hold).
The two sightings mean that the Hindenburg Omen has met the criteria.
