The Hindenburg Omen Has Arrived
Easily the most feared technical pattern in all of chartism (for the bullishly inclined) is the dreaded Hindenburg Omen. Those who know what it is, tend to have an atavistic reaction to its mere mention. Those who do not, can catch up on its implications courtesy of Wikipedia, but in a nutshell: "The Hindenburg Omen is a technical analysis that attempts to predict a forthcoming stock market crash. It is named after the Hindenburg disaster of May 6th 1937, during which the German zeppelin was destroyed in a sudden conflagration." Granted, the Hindenburg Omen is not a guarantee of a crash, and the five criteria that must be met for a Hindenburg trigger typically need to reoccur within 36 days for reconfirmation. Yet the statistics are startling: "Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and usually takes place within the next forty-days." The last Hindenburg Omen occurred during the lows of 2009. Today, we just had another (unconfirmed) Hindenburg Omen. It is time to batten down the hatches - something big is coming.
As a reminder, the 5 criteria of the Omen are as follows:
- 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.
- 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.
- That the NYSE 10 Week moving average is rising.
- That the McClellan Oscillator is negative on that same day.
- 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.
Today, all five conditions were satisfied. June 2008 was another such reconfirmed event, and as Barron's pointed out then, "there's a 25% probability of a full-blown stock-market crash in the next 120 days. Caveat emptor." Boy was the emptor caveating within 120 days (especially if said emptor was named Dick Fuld). Which brings us to the present: should the Omen be reconfirmed within 36 days, all bets are off.
h/t Teddy KGB2. War preparations on all ends but the following news does not match the real purpose of the rocket deployment as it was a warn shot against the rocket defense system Obama was about to place in Poland and Slovakia.
DEBKAfile Exclusive Report August 12, 2010, 10:12 PM (GMT+02:00)
US and Israeli military sources told debkafile Thursday, Aug. 12, that a threat from Georgia was not the reason why Russian posted advanced S-300 interceptor batteries Russia in Abkhazia and air defense weapons in South Ossetia on the northern shore of the Black Sea -as Moscow officially maintained, but rather possible moves by the US and/or Israel against Iran and its nuclear facilities.
Georgia's armed forces do not run to the sophisticated warplanes, missiles or drones that would warrant establishing the high-powered S-300 interceptors for defending the breakaway Abkhazia and South Ossetia.Ordinary air defense batteries would do for deterrence.
Therefore, US military sources believe Moscow placed the sophisticated batteries on the Black Sea shore more as a counterweight for the US Sixth Fleet warships present in the Mediterranean and Black Seas and the two big American bases close to the latter waterway - the Mikhail Kogalniceanu Air Base near Constanta, Romania, and the Bezmer Air Base used by the US Air Force just 50 kilometers from the southern shore of the Black Sea.
Their location gives the US Air Force the freedom to operate over both the Mediterranean and Black Seas.
Our military sources disclose that attention was drawn in Moscow and Tehran to the exercises the Israeli Air Force has been conducting from the two American bases to simulate strikes against Iran's concealed nuclear sites.
They noticed in particular the Israeli Yasur CH-53 helicopter which crashed in the Carpathian Mountains of Romania on July 26, killing six Israeli airman and a Romanian flight captain. It was obvious to Russian and Iranian observers from the way the CH-53 crashed and the veil of secrecy clamped down by Israeli authorities that it had been engaged in practicing touch-and-go attacks on nuclear sites which the Iranians have holed up in tunnels burrowed in the sides of lofty mountain precipices.
DEBKfile's intelligence sources do not doubt that Russian placed the top-of-the line air defense systems in Abkhazia for intercepting flights taking off from the American bases in Bulgaria and Romania and heading east over Georgia and Azerbaijan and on to the Caspian and Black Seas to northern Iran.
Byt deploying the S-300s, Moscow has put paid to any plans Israel may have had for using this northern route for attacking Iran.
The deployment was also a message of reassurance from Moscow to Tehran: Although Russia is withholding the advanced S-300 interceptors from Iran it has its own methods for blocking an American or Israel raid on the Islamic Republic's nuclear facilities.