The Hindenburg Omen - Mothers, Hide Your Children

NOTE - never ever take some goofballs views on the Stock Market as anything more then opinion.

We all know that the Stock Market seems to be random at times and while it pretends to run up and down according to the economy the real factor is human emotions.

We also know that as a football handicapper I have had a number of very successful systems that have less to do with football and more to so with the human emotion. But I watch these emotions through numbers and trends and what has happened in the past normally happens again in the future.

Last Thursday (August 12th 2010) the scariest technical condition in the Stock Market, five indicators, all blinked and sent out huge warning signs. We had hit The Hindenburg Omen.

These conditions are:

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 (the difference between the number of advancing and declining issues) is negative on that same day.

5. And most importantly - 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.

Sounds odd right?  The rational behind this is that typically the stock market is heading one way of the other. New highs or new lows. Either way a good market that is behaving rationally is either going up or down.   But in this situation we are getting BOTH which means there is an extreme divergence in opinions of investors.  A healthy market requires some semblance of internal uniformity and that certainly ain't happening right now.
 
The last two times we have hit The Hindenburg Omen was October 16, 2007 and soon after we had a 16.7% decline in the market and June 6, 2008  we soon dropped 47.3%.  OUCH!!!

The good news is that AT THE MOMENT it has not been confirmed.  You see this has to be confirmed within 36 trading days to be valid.

The other good news is even if we have a valid Hindenburg Omen it does not mean total doom and gloom  Since 1986 we have had 28 Hindenburg Omen's with an average drop of 12.8% and some have been small (5% range).  However - if we define a crash as a 15% drop, this has happened 29.7% of the time. This also means that 70% of the time there is no crash.

BUT - this is like saying that 70 % of the time your car stays on the road and 30% of the time you end up in the ditch!  Do you want to take a chance?

Just sayin'
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It has come to many peoples attention that my photos of the State Capitol always seem to have some work going on.  My two main images have massive scaffolding on top covering Miss Forward.  I actually sort of like that look in those photos.

Well, yesterday I was looking at the Cap and - IT'S CLEAR . . . .wait wait,  no I guess it wasn't.

This was taken from a few blocks away so it's not the clearest - just showing there is ALWAYS something going on. 

BUGS - I'm sick of always seeing images of Bed Bugs already! I've seem more photos of Bed Bugs in the last 3 weeks then the rest of my entire life.    ANYWAY - I was mowing the lawn last night and went past my garden and . .WTF!!!!    IT'S A FREAKING ORGY!!   

What are these - some sort of Solder Beetles? Here they are having cigarettes after there little bug sex.  All the rest of my flowers had bugs having sex.  I would have a photo but I was disgusted and the mosquitoes were swarming and I had to run into the house screaming. 

Have a wonderful weekend.

Rod