What is the Hindenburg Omen? It is a situation where the market breadth conditions occurs twice within 36 days.
- Both the daily number of 52-week highs and 52-week lows on the New York Stock Exchange are equal or greater than 2.2% of NYSE stocks that day.
- The 10-week (or 50-day) moving average is rising.
- The McClellan Oscillator, a measure of market breadth based on exponential moving averages of advancing and declining stocks, must be negative, or bearish.
- New 52-week highs are not more than twice the number of 52-week lows.
And it seems to be the precursor of something bad. We have one on April 15 and another on May 29.
Barry Ritholtz put up this nice chart showing the pass Hindenburg Omen.
Doesn’t seem to be working so well ain’t it? It does show a lot of intermediate dips though.