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Is The Stock Market Headed for A “Hindenburg Omen” Disaster?

Talking Numbers

Talking Numbers interviews Jonathan Krinsky, the man who wrote the "Hindenburg Omen" analysis that has everyone talking.

The question technical traders everywhere are asking this morning: “Is the stock market headed for a ‘Hindenburg Omen’ disaster?”

If a technical signaled is correct, the probabilities of a crash increase. The indicator was signaled this past Wednesday, according to a report by Jonathan Krinsky, Chief Technical Market Analyst at Miller Tabak.

And that has market-watchers buzzing.

The “Hindenburg Omen” is a technical pattern that is said to foreshadow market crashes. When two out of four very specific technical events happen in a 36-day period, there’s an increase chance of a crash within the next 40 days, according to the theory.

The four events are:

  1. The number of new 52-week highs and new 52-week lows are both more than 2.8% of advances and declines in the New York Stock Exchange.
  2. New 52-week highs are less than twice new 52-week lows.
  3. The 10-week moving average of the NYSE is higher than it was 50 trading days ago.
  4. The McClellan Oscillator (an indicator of whether a market is overbought or oversold) is down the same day.

According to Krisnky, all four events happened on April 15, and again on Wednesday of last week.

That may not mean you should run through the streets crying “Oh, the humanity!” but it’s something to think about, says Krisnky. “It makes some sense given the dispersion between new 52 week highs and lows,” he says. “It is always good to be aware of it, even if it proves to be nothing more than a silly topic to bring up at your next cocktail party.”

For more on what the “Hindenburg Omen” is and what it means, watch the interview with the man himself, Jonathan Krinsky, above. It also include analysis by Talking Numbers contributor Steve Cortes, Founder of Veracruz TJM.

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Coming up Wednesday on Talking Numbers: An interview with Domino's CEO

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