Tuesday, December 13, 2011

The Hindenburg Omen

UPDATED May 10th, 2012

Over the past few days I have been asked a few times about what is happening with the Hindenburg Omen.  I assure you, I have been keeping tabs on it every day but really in the past few months there has been very little to report.  I suppose the most notable item is the fact that since the first part of February the number on new 52 week highs being generated by the NYSE has been diminishing even as the market continued higher right into April.  And of course, when the markets sold off in April, so did the number of new highs.  But throughout all the action in the past 6 months, the HO really hasn't come all that close to issuing a signal.  That isn't to say that it didn't still reveal some real market weakness... it did do just that, especially at the April low.  But that isn't the Hindenburg Omen's job (to alert us to market weakness at a low in the markets).  The HO is almost binary in its performance.  It either issues a signal or it doesn't, one or the other.  Also it can be switched off in binary fashion... it's either "on" or "off", due mainly to what is happening with the 50 day moving average of the NYSE.  And this is actually quite natural because at a market top, the 50 day moving average rolls over.  Usually it's not clearly defined though and that average, just like any other, can 'flicker' up and down while in the process of turning over.  and that's exactly what flips the HO on and off at a market top.

And I can report that as of  April 19th the HO has been switched "off".  It cannot issue a signal no matter what happens with the dynamics of the new 52 week highs and lows because the 50 day moving average on the NYSE is pointed lower and will remain lower for quite some time to come.  At this point I'll insert the chart I use for monitoring this metric alone... the 50 day moving average on the NYSE:

I try to keep this chart updated on a regular basis.  Bottom line is that price on the NYSE absolutely must be higher than the orange line in order for the 50 day moving average to be pointed higher.  If that MA is not pointed higher... the HO is switched off, unplugged, batteries removed.  Click here for the latest updated version (usually updated every day).

I would also like to assure you that if the Hindenburg Omen gets real close to issuing a signal (once it comes back on line of course) I will report on it here.  Further, if the HO 'actually goes off', I will be issuing a new post dedicated to that event and the necessary follow-up.  So no worries, stay tuned to this station and you "will" be kept up to date. 


UPDATED Apr. 10th - Just with a simple comment in the comments section.

Perhaps some of you are wondering what has been going on with the market internals now that the torrid ramp job in the markets seem to be slowing down. I apologize that it's been so quiet in here, but really there has been so little to report.

Basically, during the last half of the run-up the number of new 52 week highs (say from early Feb. onward) has become very anemic and has fallen off sharply, especially as of late. From the beginning of the rally though, starting in November, those numbers had been rising nicely. Here's a chart showing what the production of new 52 week highs looks like graphically: In order to smooth it out a bit, it's probably helpful to note the white line which is a 7 day moving average of the new 52 week highs. You'll also note how badly it is diverging from the rising NYSE:
New 52 Week Highs

All this is telling us is that the rally is weakening considerably. However, during the past week or so, the numbers of new highs has been so low that it has actually been "too low" for the HO to issue any form of warning. Really, the only warning we're getting right now is the evidence shown on the chart above.

As far as the new 52 week lows are concerned, they too have been so low as to not be raising any warnings yet... averaging about 25 per day as of late, and remaining relatively steady.

So that's the reason I've been very quiet in here... the market is relatively fragile and is in range of triggering an HO signal... but the stars just haven't been aligned for it to occur. If we get fairly close though, you'll be the first to know.



UPDATED MAR. 6th -

   Further update:

At the end of trading today the numbers are quite muted.  According to the WSJ they are as follows:

New highs - 25
New lows - 30

And for backup, according to StockCharts there are 28 highs and 27 lows.  So I think we can trust the WSJ's figures for today.  Bottom line is that although the numbers of new highs had been incredibly anemic running up to the recent top, the HO is not all that upset just yet.  I'm guessing that on the next bounce we'll actually see both numbers increase from today's levels.


===========

Yesterday, when I posted a notice on a few sites where most of my friends hang out, that I had some news on the HO front I had also mentioned that I was a bit taken aback, surprised that the HO had sneaked up on me and had come so close to issuing a signal so quickly.  It was almost embarrassing because if anybody is on top of this issue I'd say it's yours truly.  I've been doing this for 29 straight months now.  I'd mentioned that I was almost caught with my pants down... feeling like I hadn't been paying close enough attention.

Let me explain why I was caught off guard.  Yesterday (Monday) before the market opened, there were only 42 stocks that were even within 2% of hitting their new 52 week low.  Therefore, considering that 85 new lows would be the minimum requirement I knew that the odds of seeing an HO signal yesterday were very remote, barring a heck of a pullback in the equities markets.  No such pullback was in progress.  Why then were there suddenly so many new lows? 

Carrying on with the explanation... with about 2 hours to go in the trading day I was stunned when I checked in with the Wall Street Journal (the only official source of data for the HO) to discover that there were already 61 new 52 week lows.  The highs were also nearly sufficient for a signal to be issued so suddenly it appeared that the HO would come much closer to issuing a signal yesterday than I thought possible.  After the market had closed, that number for the new lows was reduced by one unit... to 60 new lows.  That type of after-hours adjustment is very common.

As it turns out, my dismay was well placed because the Wall Street Journal had indeed been publishing false data all day long.  I didn't discover that until I returned to my desk last night at midnight.  At that time the WSJ had changed it's data and were reporting that only 20 new lows had been established yesterday.  What the hell?  So I checked with StockCharts and sure enough, StockCharts was also reporting 20 new lows.  So the bottom line is that as long as the WSJ cannot be trusted to issue factual data, how can I blame myself for being duped like that.  I can't... and I won't.  But let's give the WSJ the benefit of the doubt and trust that it was a one time glitch (HINT: It wasn't the first and it won't be the last).  But since the developer of the HO, Mr. Jim Meikka has ordained that the WSJ is the only official source, I have no option but to obey the rules and use their data.  But from now on I'll go to StockCharts for some form of verification (even though StockCharts almost always shows slightly fewer new lows than the WSJ does).

OK, onto the current status:

Needless to say, with today's hefty pullback there aren't very darned many issues attaining a new 52 week high.  At the time of this writing, there are only 23 (about 85 are required).  And this may surprise a few people, but there are also only 28 new 52 week lows.  StockCharts reports similar (but not identical) numbers so we can be reasonably assured that the WSJ isn't playing games today.  So the odds of seeing an HO signal today are very remote indeed... just as I thought before Monday morning's open.

Although I let this particular post go very quiet when there is little to report, rest assured that I'm still monitoring the components of the HO on a daily basis and will report more here as it becomes necessary.  For the moment then, it's one of those "Move along folks, nothing to see here." type of days.

But feel free to check in whenever you like.  If there is something to report, it will be here when you get here.

Best of success to all.  Stay safe!

UPDATED MAR. 5th -

As I pointed out about 10 days ago in this piece, the number of new 52 week lows has been very, very weak considering that the market has been jacked up for something like 50 days straight.  Be sure to check out the chart and click on it for a live picture of what's happening.  Normally we'd be seeing much higher numbers for new 52 week highs after such a run.  For example, just prior to the April, 2010 high the $NYSE was generating an average of about 400 new highs every day with a peak near 650.  With 1.5 hours to go in the trading day today, the number of new 52 week highs is currently at a paltry 72 with 85 required by the HO.  The number of new 52 week lows has risen sharply over the past few trading days from an average of about 20 to 63 at the moment of this writing.  85 are required.


The bottom line is this... the Hindenburg Omen is rumbling big time and is threatening to issue an 'initial signal'.  For those who haven't yet read the piece entitled "So The HO Issues a Signal.  What Happens Next?" I highly recommend that you do.  I've been urging readers for months now to do that ahead of time.  It's very important to really understand what an HO signal means and to be fully cognizant of what we might expect going forward. 

Stay tuned.  This particular post is going to become quite active after 2 months of silence.  Now you know why I keep this particular post quiet most of the time. 

At the end of the day the numbers ended up as follows.  85 of each were required:

New 52 week highs - 81
New 52 week lows -  61

Those numbers are often adjusted by a digit or two after hours but they're close enough to paint the picture.  So clearly the market internals are shifting from very weak to 'weaker yet'.  All I can say is that the market internals are residing in an area where the HO is more or less drooling, and at a time when we've just witnessed almost 50 days of straight 'up' action.  It's also an occasion when I saw the HO awaken from a slumber faster than I've ever noticed in the past.  Obviously something's wrong.  We'll post updates tomorrow for sure.


UPDATED JAN. 10th - Things are starting to get very interesting on the HO front.  As many of you know by now, one of the parameters that go into the HO formula is that the 50 day moving average must be pointing higher on the day the HO triggers.  And as we all know, when a market reaches a top, sooner or later that 50 day moving average is going to roll over and start moving downward.  This obviously is a very bearish development.  How ironic is it then, that at a market top, when the 50 day moving average does roll over, it also switches off the HO.  The HO cannot issue a signal once the MA has turned lower.  That's exactly where we are today.

This is one of many reasons why the HO does not go off all that often. The rules were strict enough 10 years ago, but with the advent of the changes instituted by its inventor at least two years ago, today it is even 27% more difficult for the HO to go off.  And contrary to numerous reports (by the experts who are still unaware of those rule changes), the HO has not issued a signal since August of 2010.  And as of today, it is not permitted toThis condition is most likely going to persist until at least Thursday, Jan. 12th.  

It's too bad that the HO doesn't issue a signal just before a market top, but by it's very strict nature... it won't.  It needs to see very strict and concrete evidence.  Therefore it is usually late, just as a 50 day moving average is late.  But once the HO
comes back on line probably later this week, watch out.  That would mean the 50 day moving average is flickering... a sure sign that the market is at a decision point... perhaps an inflection point. Such conditions within the market create an atmosphere that is absolutely prime for an HO signal.  Of course this doesn't necessarily mean that a signal is imminent... not necessarily, since the market action could certainly resolve to the upside.  But it's a big fat amber flag to be sure.  So please stay tuned!  This particular post is always updated when there is something developing.  Other than that, this room remains relatively quiet.


UPDATED JAN. 6th Day after day after day, the HO flirts with us, lol. The more I watch this thing in action, the more respect I gain (I already had plenty) for its inventor, Jim Meikka. If you haven't already read about who Mr. Meikka really is, scroll down to the paragraphs above and below his picture.

Ok, at the moment we're seeing 74 new highs (with about 85 required) but there are just 12 new lows. The number of stocks within striking distance of attaining a new low are more than sufficient though... should the markets suddenly decide to finish the week with a big Friday dump. Maybe some of you will do the same thing? I'm not suggesting that's what's coming, but who'd be surprised? The markets are so wacky, so fragile right now that absolutely anything is possible.

So stay tuned... for some reason my spidey senses are tingling just a bit. On the other hand, perhaps they shouldn't be because I really can see the potential for a rocket shot to close the week as well.



ADDITIONAL UPDATE JAN. 5th - This is actually a pretty interesting day on the HO front. As I mentioned, the HO did flicker off for a short while there and as I also mentioned, it was possible for it to flicker back to life if the NYSE were to bounce. And that's exactly what has happened. The NYSE bounced and the HO is back online.  These events actually are not unusual around the time when an HO signal occurs, since any major turning point in a market usually does occur in conjunction with turns in moving averages.  Not only is it normal, it's to be expected.

In the meantime, the required number of new 52 week highs has almost been attained thanks in part to the little blast-off that happened off today's low, and yet the number of stocks within 2% of their own new 52 week low has actually risen.  The HO is still online and the possibility of getting a signal today still exists, although it seems remote.



UPDATED JAN. 5th This post will be updated on a regular basis as long as the market is producing prime conditions for a signal. From now on, updates will appear at the top of the post rather than in the comments section.

As I mentioned about a week ago (both here and on the insta at Seeking Alpsh), the HO would be in danger of switching off somewhere between today and Jan. 9th. That possibility was due to an increasing potential for a violation of the rule about the 50 day moving average of the NYSE must be rising. At this very moment, that's exactly what has just happened. The HO just flickered off.

At the close of today, the NYSE must be higher than 7547.63. It has just dropped below that level. So as of this moment, the HO has gone "offline" and is disallowed from issuing a valid signal. It's entirely possible that the NYSE could put in the required bounce today that would be necessary for the HO to remain online. That level is 7547.63. Tomorrow it will be given a bit more breathing room and will come back online provided the NYSE is above 7400.82.

Other than that, the numbers of new highs and new lows are still being ground out and it's too early in the day to get any sense of where they'll end up. There are currently only 9 new 52 week lows and only 51 more issues that are within 2% of putting in a new low of their own. So the odds of seeing a signal today seem rather remote anyway.  



The real reason for this update is to demonstrate how false alarms occur.  Some analysis are all too trigger-happy to issue a declaration that "The HO has gone off!  The HO has gone off" when in fact it was impossible for a  issued a signal to be issued.  Theoretically, today the number of required new highs and new lows could be generated.  But as long as the NYSE is below 7547.63 (today only) there is a strip of masking tape over the mouth of the HO.  It cannot issue a signal under these conditions.


================

Many of you may know by now that for the past 26 months I've been conducting ongoing vigilance over the metrics required for the Hindenburg Omen to issue a signal  and reporting it as required to my friends and followers over at Seeking Alpha.  By "as required", what I mean is the various occasions when it was making rumbling sounds or conversely, at times when it became broken for weeks on end due to rule violations, and even at times when an hourly basis or less was required... as in, she's about to sound the alarm.

BEFORE WE GO MUCH FURTHER, LET ME MAKE ONE THING PERFECTLY CLEAR.  IN SPITE OF NUMEROUS REPORTS THAT THE HO HAS ISSUED SIGNALS IN DECEMBER, SUCH AS IN THIS REPORT, I ASSURE YOU THE REPORTER DOESN'T KNOW HIS SUBJECT.  HE'S EITHER USING RULES THAT WERE TOSSED IN THE GARBAGE YEARS AGO OR HE'S GETTING HIS INFORMATION FROM MARIA.  REPORTS SUCH AS THESE ARE THE VERY REASON THE DEBUNKERS DECLARE THE HO SIGNALS TO BE OF NO VALUE.  THE DEBUNKERS ARE CORRECT, SIGNALS SUCH AS THE ONES IN THE RECENT REPORTS ARE INDEED OF NO VALUE... BECAUSE THEY DIDN'T HAPPEN.

Over time, the list of the closest followers of the HO topic at SA has dwindled as the markets began to embark on an uptrend and all talk of the Hindenburg Omen basically disappeared.  But those remaining followers have been very dear
friends of mine for years now and have dropped in to read every report I've ever issued, whether it was just something of passing interest or of the much more serious "warning" variety.  They have all been avid students over the past 2years and by now are well educated on the topic.  Every one of them is aware of what it takes for the HO to issue a signal, the history of what unfolded in the markets after one was issued, and the changes that have been made by the inventor of this remarkable indicator over the past two years.  Changes that compensate for the increased number of ETFs (both the bearish and the bullish) and the increased number of bond funds.

Today we saw the market register what I think qualifies as a relatively close near miss.  We saw this phenomenon occur many times in April of 2010 until finally, one week before the flash crash and on the morning of the flash crash, the HO came about as close to issuing a signal as possible... without actually issuing one.  No doubt that was due to the much more stringent rules demanded by the inventor, Mr. Jim Meikka.  By the old rules, it would have issued the signal on numerous occasions.

I have put in so much time and energy to the HO blog at Seeking Alpha that I don't see any point in bringing it to this new space.  The easiest thing for anyone who's interested would be that I simply redirect you to the SA blog where you can follow the proceedings on a daily or hourly basis as conditions warrant.



Before I do that though, I just have to say that it never ceases to give me a chuckle when I see the debunkers come out in full force any time the topic of the HO is brought to the forefront.  In fact on the weekend I saw one particularly ignorant individual, an accomplished troll of great reknown, make the following statement: "Is Alberta using the heavily interest rate biased data from the NYSE high/low list? If he is, then his HO indicator is biased by closed in bond funds, utility stocks, preferrereds, and ETF's just like the NYSE A/D data."

That particular question is actually very valid and it pops up every single time the HO is mentioned.  In the most recent case though, it was simply a troll doing the one thing he does best.  In most normal cases though, it is brought up by those who are simply ignorant (innocently so) of all the rules required for the issuance of a signal and more importantly, the rule changes that were instituted more than two years ago to compensate for a different market.  They are stringent indeed.  In fact, I have reason to believe that it's possible they are so stringent that they are preventing signals when they should be issued.  We actually have absolutely no way of knowing that with any certainty.  That being said, we respectfully and loyally abide by the strict rules as dictated by Mr. Meikka, who himself is a very interesting story.  For one thing, he is an accomplished rifle marksman.  He is also an accomplished inventor.  He has also been blind since 1986 when he lost his sight due to an explosion.

JIM MEIKKA AND ZOEY
He's also fearless.  From this article: "Krokker recalls Miekka's decision early this year to walk from the Citrus County facility to St. Petersburg, aided only by guide dog Zoey, a Braille compass, a tape recorder with exact mileage recorded for the trip, a talking watch, a cell phone and a trailer hooked to his belt and pulled behind him. The 130-mile trip took two weeks. That's longer than expected because he did not walk on windy days when he could not hear the cars around him."

So for those of you who are interested in the Hindenburg Omen, and those of you who lie and say that you aren't, this is a link to the latest entries in the 26 month long series as seen on Seeking Alpha.  This is the same link that is also found in the panel on the right side of this page, for those who hadn't noticed it.

Also, I strongly advise readers to get yourselves familiarized with what an HO signal means.  It's far better to do it now rather than after the first signal has been issued, just for your own peace of mind. So The HO Issues A Signal. What Happens Next?
                         .

47 comments:

  1. Hey Greg. Before we go much further, I'd left you a note stating that I'd deleted your very first posts on this blog because I wasn't sure if you wanted your name to appear as seen here or as seen on the other site. I hope you don't mind or at least appreciate what I was trying to do. You were just helping me with practice anyway, which I greatly appreciated. I'm getting the hang of this thing much faster than I thought I would. I don't like the format though, I'll be honest. I'd prefer if replies would be properly 'threaded' and I absolutely detest the fact that if I or anyone else were to post a link to a chart, in order to see it you'd have to 'copy and paste' the link (rather than just click it). I hate that.

    You know me man... I'm not the best waver out there. I won't even begin to try to put an EW count on the dollar but it sure as heck has broken out. As far as your observation is concerned that the Euro looks worse than SPY does, I don't think that should bother you too much. The Euro is clearly breaking down but we shouldn't expect an inverse "same percentage" gain in the dollar nor a "same percentage" drop in US denominated equities as what the Euro is doing. The Euro only makes up 57.6% of the US Dollar Index. So I think things are playing out pretty much logically in terms of percentages. The Euro 'should' drop harder than SPY does. Both are headed in the right direction and that's what counts if we're expecting a bearish scenario for equities.

    I'd say no worries. Well actually, our Australian buddy would say "no worries mate". I'd say "don't sweat the small stuff", lol.

    Greggor, in all honesty I don't even see 'any' type of Santa rally on the horizon. I mean there are only 8 trading days left before the big boy gets here. Yes, a pretty darned spiffy rally could happen in 8 days but there is so damned much downward momentum now, complete with some pretty darned good trend line breaks, price level breaks and larger moving averages rolling over, that I think there is something darned serious building for the downside.

    I 'could' add that the HO darned near issued a signal today too but really, that would be more of a coincidence than anything else. The HO is a wonderful indicator that 'must' be respected, but it is only loosely related with turning points. So I won't even mention the HO, lol.

    Thanks for stopping in bud :-)

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  2. By the way, speaking of DK, he dropped in here the other day with a word of encouragement, lol. Doc swung by too which was a pleasant surprise. Jack too. So it's nice to see a few of the good guys drop in. I imagine a few more will too, in time, but I have no intentions of building some sore of a big blog. I don't have the time for it nor the interest. Instead, I was literally forced to create this space if I want to have a quiet room where I can just do what Pebble does. You know... put your stuff down on paper?

    Speaking of Pebble... that's one great dude. Hell of a nice guy. We've chatted privately over at SA, exchanged emails, etc. Needless to say, he's not a troll fan either. Too bad because the other site would be hearing a hell of a lot more from him as well if that room didn't have some real idiots pissing everybody off. There are more great peeps quietly slipping away every day too. But hey... it's not our site. Either it suits us or it doesn't. And at this stage of the game, it's no longer suitable for what the goals are for many of us. In any event, I just love the peace and quiet in here. Know what? We could theoretically see a day when 15 of the good folk were in here and it'd still be a quiet, productive space. Don't get me wrong, that's not a goal, but just an appreciation for a peaceful atmosphere.

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  3. With almost two hours gone in the trading day, the number of new 52 week lows required to satisfy the HO has been reached.

    New lows stand at 89 with 82 required (that number changes slightly depending on how many shares have traded at that time).

    And the number of new highs stands at 33, with a minimum of 82 required. Considering that there are still over 200 stocks within 2% of attaining a new high, it's not a stretch at all to reach that level if the market were to put in a decent bounce from here.

    So she's definitely rumbling. Big time. I think the odds of getting a signal today are pretty high. All it's going to take is a reasonable bounce. As is usually the case, the HO signal, if it comes, should happen in the final hour or minutes.

    As a special note, for those who follow Dr. Robert McHugh please keep in mind that unless he has caught on to the new rule changes in the past few months or so, he's still using the old rules and would declare that the HO has issued a signal when it in fact may not have. The last time I saw him discuss the HO, he was still unaware of the rule changes. I have chatted with him briefly in the past via email and he's a great guy. But at the time we weren't discussing this issue.

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  4. Well it sure looks like the Hindenburg is going to issue a signal today. The market has been open for a less than 2.5 hours and already we're seeing very strong signs that we're going to be getting a signal. Currently the numbers are as follows:

    New highs - 32
    New lows -44

    Keep in mind that 84 of each are required as a minimum. At the current rate it's gonna happen. Should the market suddenly turn south sharply then the odds will be diminished though. But so far, for this early in the day, we're far closer to getting a signal than at any other time since August of 2010.

    So we're likely going to get the big orange flag today. I say "orange" because it's so important to understand what this first signal really means. For that, don't forget to read the "what happens next" page:
    http://albertarocks-ta-discussions.blogspot.com/p/so-ho-issues-signal-what-happens-next.html

    Stay tuned :-)

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  5. A special message to Trader Jack. I see you joined the Happy Gang. I appreciate that. So much so that some day maybe we'll hook up at this place and I'll by you a beer or 20:
    http://www.traderjackscookislands.com/

    Since so many people have suddenly dialed into this page (according to the page hits), I'll just provide this little update. The numbers of new highs and lows has stalled somewhat which I guess is logical since the market has done the same. They currently sit at

    40 new 52 week highs and
    49 new 52 week lows

    One commenter on one site the other day (I'm sorry I forget who it was but I'm pretty sure it was on Seeking Alpha) suggested that attaining the required number of new highs might be a tough nut to crack. I agree with him. In fact I've got a hunch the market is going to sell off before the day is done and that might be the key to "not getting" a signal today. We'll see, but so far we're on track.

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  6. Hello... I'm a newcomer to your site/blog, and read about the HO with great interest. I apologize in advance for this likely 'newbie' question, but perhaps you can provide a quick answer or point me in the right direction. Are the $NYHGH and $NYLOW indicators reliable for determining the new high/new low data? Or are these too 'polluted' with ETFs, ETNs,etc. that just duplicate the overall market to be reliable, in which case what do you suggest? I'm using stockcharts and with an hour to go they show 72 new highs and 62 new lows... getting (apparently) close to the threshold (?).

    thanks

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  7. Hi Anon. No problem. $NYHGH and $NYLOW are not allowed. The reason for this is that there is almost always a slight discrepancy between those and the cast in stone official source which is the WSJ. Sometimes quite a big discrepancy. I've even spoken with Cole Johnson at StockCharts about this issue and he too advised to refer to the official source. Besides, the HO is about 32 years old and if we start changing sources for the inputs it needs then we might as well just toss it in the garbage. I was making that mistake myself in the earlier days of writing about this topic.

    While I'm here I might as well provide an update. It seems that the number of new highs has stalled out. It currently sits at 44 issues although the number of new lows continues to climb slowly. Currently at 60.

    So it's now looking like a signal will not likely occur today. Nevertheless, just by monitoring what's going on deep inside the market we're still well informed that it's a sick puppy.

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  8. Well at the end of the day the numbers are not all that far off what the market generated yesterday.

    Yesterday the market provided:
    61 new highs and
    107 new lows

    Today it generated
    52 new highs and
    64 new lows

    In both cases the numbers are obviously a bit too small with 85 of each being the required minimum, simply meaning that the very strict requirements are demanding an even greater degree of stress that we're seeing right now. Normally I'd wait for a half hour after the market closes to publish these numbers because there is usually an adjustment of 2 or 3 issues. But really it's a moot point today. I gotta run, that's the problem, lol.

    Just before the flash crash we saw many days like this where the ratio between the two were approximately the same as what we see today. Some days there were more lows than highs and then the next day, the opposite. This went on throughout most of April of 2010.

    Just for interest sake, and remember this has nothing to do with the HO, on the NASDAQ those numbers are 25 new highs and 114 new lows. 71 of each would be required if there were such a thing as an HO for the NAS. But there isn't. And believe me, one isn't required.

    Same time, same station tomorrow. Have a great night :-)

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  9. Hey AR, I appreciate you trying to delete my name on prior posts. I was not able to sign up using my GregInBaltimore alias. I signed up twice and it takes part of my email as my name. Not sure how to change that.

    It IS very refreshing to read your posts without having to look through hundreds of posts to find the nuggets.

    It takes me a bit to start a new habit, but I'll definitely be by here regularly. I definitely think you'll be building a following over time.

    Thanks for the update to the HO ... always nice to add that to the quiver of arrows. Good to know the risk is building. Thanks for your feedback on the Euor/dollar/SPY.

    I missed my AUD/USD trade 3 times this week for various reasons ... pulled the trade before sleeping Sunday night, missed another dive during a meeting, got stopped out of one before it dove. But just to give you an idea of how profitable a crash in the AUD could be:
    8K x 35:1 leverage (400K) x 200 pips on Monday = 8+8=16K.
    16 x 25:1 leverage (400K) x 150 pips on Tuesday = 6+16=22K
    22K x 28:1 leverage( 600K) x 100 pips = 6+22=28K. A 2.5 bagger. In 3 days.

    You need a very good set up to get the likely timing and direction right obviously. But Friday's end we had it ... a retest of a break, and a doji below the bolenger band on the weekly. With DK's count looking like b ended of minor 3.

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  10. OK, now I have my alias back ... editted profile.

    ReplyDelete
  11. P.S. I'd like to be able to edit my comment above. I meant to say Thursday (1.03 to 1.01), Tuesday (1.02 to 1.005), and Wednesday (1.014 to 1.004).

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  12. P.S. on the Euro and the SPY. I wasn't thinking they needed to move the same percentage, I just thought the EURO breaking below support was the real direction, and the market holding up was the trickery. That the market would also break down soon. The Euro breaking down I think eventually will be an omen to the real direction of this market.

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  13. Hey Greg! I hear ya man. I don't like the idea that a registered commenter can't edit his posts. I also don't like the fact that comments don't properly 'thread' here and I particularly detest the fact that chart links are static. We have to cut & paste them if we want to view the chart. I hate to say it but I might have to find a different bloghost that offers those things.

    Danno's site is powered by Disqus as you know. But so is this one that belongs to Pretzel:
    http://pretzelcharts.blogspot.com/

    If you haven't seen his site yet, I can't stress enough how good it is. First of all, he's a nice guy who responds to a comment very quickly. Secondly, he has great charts and what I think is a great read on them. Thirdly, his writing skills are excellent and he gives reasons for his opinions. His site also threads like Danno's does. And yet, I don't think he has a single troll on his site. What else could we ask for? Well I guess I could ask for one thing... his colors hurt my eyes (literally). Other than that though, I like this dude so much that he was one of the first I put on the blogroll along with Pebble of course. I've got Danno's on there just out of respect for the guy but man, I really don't like pointing people to a troll filled disaster. If it weren't for Danno's vision and determination, I probably wouldn't have that link over there at all. But it boils down to a a respect thing.

    Greg, if you want, why don't we try this. Re-enter the comment the way you want it to read and delete your wrong one. Then I'll delete the ones you delete and they'll disappear altogether I think.

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  14. Yes, confirmed... they will disappear altogether as you can now see.

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  15. Reposted:

    Hey, great blog good sir!
    Thanks for the HO update!

    I had one comment on the troll-filled blog, I copied it below. I think the currency markets are signaling a crash is possibly near -- 3 of 3 of 3. But the equity markets are (gasp) perhaps propped up for now.

    That dollar chart seems key right now.

    What is bothering me is that the Euro looks so much worse than the SPY ... canceling out the good news that supposedly lifted the SPY.

    The EUR/USD is now WELL below the preThanksgiving 2 sets of good news (cheaper dollars so they could wink wink buy up toxic bonds ... but ooops that was taken off the table), and the Ezone agreement to be more austere (oh brother). It's even below the October low! But the SPY is still above the pre Thanksgiving point. And it was rallying on the European good news, but now the Euro doesn't think there is any good news. So which is more predictive?

    There's a very good chance that the dollar has already started it's (iii) of 3 of (3) ... because the AUD could already be in a c of (3). We just have to as TBONE says ... be ready for this scenario. We'll find out soon enough.

    Also, it's hard to imagine a Santa rally breaking through that 200 dma brick wall (never happened in 2008 either). With currency markets on the ropes -- maybe they bounce at these key levels 1.32 Euro and 1.00 AUD. Or maybe they crash through them.

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  16. OK, thanks ... now I can be anonymous again :)

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  17. Greg, I could start another post that focuses on on currencies if you like. I guess the only problem is that I have to leave for work every day right after the markets close and don't get back until midnight eastern. Same hours on weekends too. I recently worked my 79th weekend in a row and then took one off. How's that for consistency? lol I usually take Tues. and Wed. off. If I'm working on an article, Tues. and Wed. is usually when I do it. The point being that maybe DK will drop in so you have somebody to discuss it with when I'm not here?

    When I get time to do it, which currencies or pairs would you prefer? Aussie/dollar? Euro/dollar? Aussie/Yen? For starters, we'd need to have the dollar and the Euro for sure, as standalone charts. Geez... this whole topic could be an article in itself. But it's such a dynamic situation that it would probably be more useful to do it just in a new post and keep it running. Let me know!

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  18. Well the market obviously got off to a different kind of start today and as a result, the required number of new 52 week highs is half way there already. At the moment there are 43 new highs and 21 new lows. With 85 of each required, nothing has changed and the markets are hanging around right in the HO's wheelhouse. We'll follow the action and see how it develops throughout the day.

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  19. With two hours to go in the day, the numbers are as follows:

    New 52 week highs - 66
    New 52 week lows - 54

    With each passing day we are getting closer and closer to seeing that initial signal. Doesn't mean it has to happen but we're probably never going to see more perfect conditions for it.

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  20. Well with less than an hour to go in the day it looks like we might end up with yet another squeaker, one that's going to end up being even closer than yesterday. At the present time we would need to see 84 new highs and 84 new lows at the minimum. Currently there are:

    71 new highs and
    58 new lows

    In case anybody out there is of the impression that the required number of new lows is too far away to attain, just keep in mind that on top of the 58 already established today, there are another 145 hiding just around the corner. Every single one of them is less than 2% away from their own new 52 week low.

    With Goldman Sachs down 2% for the day and at the low of the day, and down more than 11% for the week, it's pretty hard to argue for the bullish case.

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  21. Well folks, I gotta run. Like right now, lickety split now that the market has closed. It ended up generating highs and lows as follows, with 85 of each required:

    75 new 52 week highs and
    62 new 52 week lows

    This is very similar to what happened throughout the month of April, 2010 until finally, one week before the flash crash and on the morning of the flash crash, we saw the HO miss by 2 or 4 issues. That was plenty close enough for me and I was plenty short for the flash crash. So were my followers at Seeking Alpha... those who believed in its importance that is.

    Have a great weekend and I'll see you on Monday when we'll pick up where this story left off. In the meantime, feel free to comment throughout the weekend if you have a mind to.

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  22. Stay tuned today friends. The HO is once again off to a fast start... insofar as that we're already seeing more than half the number of required new highs with new lows just chomping at the bit to join the party. In the first 25 minutes we're looking at:

    49 new highs
    25 new lows

    The market will need to generate 85 of each in order to trigger an initial HO signal. There are other rules of course, but there is only one that we'd need to confirm later in the day which refers to the direction of the McClellan Oscillator. But once again, there is no question that the markets are exhibiting the perfect atmosphere for a signal.

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  23. Ok, things are ticking along just about right. With a little over an hour gone in the trading day the NYSE has already generated

    57 new highs
    42 new lows

    Without stepping out on a limb too far, I'd have to say that the odds of the HO going off today are pretty high. Mind you, early in the day on Thursday and Friday the same thing could be said. But those two days ended up producing relatively close misses. In fact, on each consecutive day last week the HO came closer and closer to signalling, but didn't quite make it.

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  24. The required number of new lows has been attained. All the market has to do now is to generate 17 more new 52 week highs and the HO will go off.

    If that were to happen, if those last remaining new highs are attained, we'd have to see how that occurred. If it occurs due to a sudden spike in the markets, then the question becomes "is the McClellan Oscillator negative on the day?" In other words, what is breadth doing? Are there more advancers or decliners? We'll just have to wait it out and see, but we're currently about as close as we can get without a signal being issued.

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  25. Geez... as we saw so many times during the run-up in April, 2010, we so often see either the new highs or the new lows stalling out just short of what is required to satisfy the HO's strict requirements. Of course that's also what makes it a seriously good indicator, it doesn't screw around with false signals.

    Today, the number of new highs is the culprit. The market just can't quite generate 'em. We're still stuck at 66 with 83 required. But I think all of you get the picture now. The market is very, very polarized... very dangerous. That alone is a nice benefit of watching the HO like I do. It makes one focus on this particular area of the market internals matrix.

    I'll also publish a short article the moment the HO goes off, so watch for it over on the right panel in the blog archive.

    Stay tuned here as well... we're just waiting, lol.

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  26. With the little breakdown we've seen in the last hour and with new highs stuck at 72, the HO may refuse to issue an official signal. It's too bad because by the old rules the HO would have issued a signal a few moments ago.

    No doubt we're going to be seeing all kinds of sites now declaring that an HO signal has gone off, and every single one of them is dead wrong. With the correct rules, it's still possible that a signal will be issued today but I highly doubt it now.

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  27. With the little breakdown we've seen in the last hour and with new highs stuck at 74 with 86 now required, the HO may refuse to issue an official signal today. It's too bad because by the old rules the HO would have issued a signal a few moments ago.

    No doubt we're going to be seeing all kinds of sites now declaring that an HO signal has gone off, and every single one of them would be dead wrong. With the correct rules, it's still possible that a signal will be issued today but I highly doubt it now. That would be so unfortunate because this is the exact reason why there are so many who scoff at the HO (and at me for even reporting about it).

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  28. AFTER THE CLOSE:

    The NYSE ended the day having generated 77 new 52 week highs with 85 required. By the old rules, the HO would have triggered since all other conditions have been fulfilled. But the old rules are just that... old, in the garbage. We HAVE TO use the new rules in order to declare a legitimate signal. I simply refuse to contribute to the plethora of false signals out there by declaring that a signal has been issued. IT ABSOLUTELY HAS NOT.

    Nevertheless, all of us can plainly see what the HO is telling us, that the market is at a rarely seen level of polarity. Do with that information as you see fit. And to ignore it completely is absolutely your right. I'm just your friendly reporter... I'm not here to preach any gospel to anybody. Emphasis on the word 'friendly', lol.

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  29. Hey Albertarocks, it's taken me awhile to get back here. My kids are home and my wife has been on the computer with your blog stored handily in the favorites. The other computer has google which can't find your blog. Glad to be back to read your HO updates ... it sounds very close. Like a ticking bomb.

    Hey, I like your idea to do a currency article quite alot. I think currencies are just key here, and many investors don't follow them, but they are key indicators to the story this time around. That's why I figured I better start following them. I think they are less confusing than the index which has become a complete mess to count as far as EW's go (because it's so damned manipulated). No one would dispute that one, eh?!

    I follow two main ones closely ... AUD/USD and EUR/USD. And I keep USD/JPY on the back burner. I probably should follow AUD/JPY. I think the dollar/AUD carry trade unwind and the impending rate cut that DK mentions in Aussieland make shorting AUD/USD almost a sure thing (timing is everything tho). I've mentioned I think there is a fortune to be made there. And EUR/USD is a key indicator for getting a read on the perception of health of the Euro.

    As TBONE says, we're all currency traders now with the dollar threatening to spike. Still above 80! It's in breakout mode (nothing else is).

    Hey, your currency article is probably got a key month here in December with silver and gold threatening to puke!

    Anyway, great to have a place to find you and your insightful market musings. Always great contributions. Thanks, I like your office! It's nice in here. Bet BoboM will like the troll-free atmosphere! Happy holidays to you and your family!

    P.S. I finally arrived and got a blog posting flogged at Daneric's. That was the one pointing out that the AUD/USD was just under the middle bollenger band for the weekly ... a picture-perfect end of the b-wave of the minor-3 wave. Got nervous before sleeping Sunday night last week and pulled my short order. Would have been worth 400 pips. But I got 100 of them anyway at 40:1. Live and learn (should have placed a stop and let it run). But I knew from you ... when those postings get flagged, it means it's right on ... and someone doesn't want anyone else seeing the trade.

    Thanks for the HO information, and the info on the 10/80 cross!

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  30. P.S. I meant to say your commodity article would have a very good data point in December's experience.

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  31. Great comment Greg. My apologies for taking a while to get back to you... was at work after the markets closed. I have Tuesdays and Wednesdays off most of the time but tomorrow and Wed. I just absolutely "have to" get the re-write of the $CRX article done. It's evolving pretty much as I suggested back in May that it would. It has developed into a pretty darned exciting chart and I can barely wait to share my findings with the blogosphere. John Lounsbury is really looking forward to publishing it.

    But for the first time ever, I guess I have my own place to assemble an article. Prior to this I have put articles together on somebody else's site, like Seeking Alpha for example or Michael Eckert's EW Trends and Charts. Eckert is one hell of a good guy:
    http://elliottwavetrendsandcharts.com/albertarocks-2/


    So I guess I'll put it all together on this blog but will let Lounsbury have access to it immediately. Man, that guy has been one staunch supporter of yours truly. He really likes my type of work for one reason or another, and he was one of the people who encouraged me to write. Over the past two years, several people had encouraged me to write but I had no inclination to do so whatsoever. I probably lacked confidence as well since I'd never written anything since my college days. But I eventually tied a few articles and Lounsbury published them. Turns out they were a big hit, much to my total shock and awe.

    Lounsbury told me that one time he priced homes in his area in gold and all his friends thought he was nuts, lol. So he understands the ratios style of analysis pretty darned good. He's one great guy too. A great contact for me.

    Anyway, the point I'm getting at is that if I'm going to put together a currencies blog, it'll unfortunately have to wait until I've finished writing the next article (which I will hopefully find time to do tomorrow and/or Wednesday). But with all the HO things going on, even that might be a tough nut to crack. I'm bizzy, lol.

    Glad you could make it back here. It's a lovely quiet spot. I'm not nuts about the a couple of things though (such as: it doesn't thread properly like we're used to and the links are static... we have to copy and paste 'em if we want to see what it's pointing to).

    But it's a work in progress... a learning curve.

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  32. Well what a glorious opening gap the markets put in today. We'll be able to see throughout the day how much of an effect it will have on the market internals. Yesterday the market had a difficult time attaining the required number of new 52 week highs. Today it might be the new lows that don't quite make the minimum requirement. We saw this flip-flopping happen on a regular basis back in April of 2010 just before the flash crash.

    So far this morning, the NYSE has generated:

    82 new highs and
    17 new lows

    Approximately 85 of each will be required. That number fluctuates slightly throughout the day. We'll keep you informed right here as the day progresses.

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  33. Ok, the minimum number of required new 52 week highs has been attained having hit 91. It could climb much higher as well with a ton of stocks within 2% of reaching that level themselves.

    There are also 130 stocks within 2% of attaining a new 52 week low on top of the 18 that have hit a new low this morning so far. It's certainly a dynamic situation so we'll continue to keep our eye on it. But the odds of seeing a signal today appear to be very low.

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  34. Well I think that's about all we have to see for today kids. The number of new 52 week highs has stalled right out at 113 and the NYSE has only generated 21 new lows so far. There are another 130 stocks within 2% of a new 52 week low in spite of today's rally. So the markets are 'still' hanging out right in the HO's wheelhouse although it would take a complete unwinding of today's ramp job to see it today. In any event, it's possible to get a signal any day when the internals are this polarized. Maybe tomorrow, maybe the next day and maybe not at all. We just have to monitor the status and see what develops.

    By the way, any reports you might have seen last night about the HO issuing a signal are bogus. Plain and simple, it DID NOT go off yesterday. We use the proper HO rules on this site, not the old rules which were thrown in the garbage at least two years ago.

    Stay tuned... I'll keep reporting right here as the need arises.

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  35. Well today it appears we're going to see the market perform the exact opposite of what it did yesterday. Here's a huge difference though:

    Yesterday the markets gapped way higher at the open, giving little chance for the new 52 week lows to develop. Then the market just continued higher from there. Today, the market clearly appears destined to finish lower *but the required number of new highs has already been attained*. With 117 stocks within 2% of a new low, the odds of seeing that signal today are FAR greater than they were yesterday.

    New highs currently at 99 (and that's enough)
    New lows currently at 21 (with 84-85 required)

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  36. Well the day ended up being a total non-event from the perspective of the HO. Stay tuned because we're monitoring it every day.

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  37. I might as well give a bit of an update because the HO is again rumbling. As of this moment, with a little over 2 hours to go in the trading day, the numbers for the new highs and lows are as follows (with about 85 required):

    New 52 week highs - 106 and stalled out
    New 52 week lows - 37 and climbing 'very' slowly

    Right now there are also 'another' 112 issues that are within 2% of attaining a new low of their own. So seeing a signal be issued today is definitely within reach. I'm not sure it will happen though considering that the broader markets are already down by about 1% on the day. Some are down quite a bit more though, such as the $CRX (commodities only stocks) which is down 2%, the implications of which are quite deflationary. That's one of the components of a study I've been working on that will be published Jan. 3rd on Global Economic Intersection. Pay no attention if a page opens up suggesting that it's "forbidden". Just hit the link that says "bypass this message". Never could figure out what that is all about.

    In fact, the upcoming article is a follow-up to the article at the top of the list shown in the link. A whole lot has happened in the 7 months since the original article was published and the implications seem to be pretty darned deflationary. Watch for it if you have a mind to.

    In any case, feel free to stay tuned to 'this' post too, since the market is currently exhibiting all the right symptoms for an HO signal to be issued. As I mentioned, I kind of doubt it happens today but at least we know the conditions are prime.

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  38. Well the day ended pretty much as a non-event as far as the HO is concerned, other than the fact that the market is still hovering right where it needs to be in order for a signal to be possible.

    It ended up with 115 new highs and 46 new lows. Tune in tomorrow if you have time because if the HO is ever going to issue a signal, these are the right market conditions for it.

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  39. From the perspective of the HO, today is pretty much developing as a mirror of yesterday. The number of new highs appears to have stalled out at 85 (which is the minimum required... it's enough) with 28 new lows. In spite of the upward movement today there are also 126 'additional' stocks that are within 2% of reaching a new low of their own, So the stage is set. All we can do is to continue to monitor it. Stay tuned :-)

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  40. Well today produced very similar results as yesterday did. The NYSE ended up with 110 new highs and 34 new lows. These numbers show without any doubt that the market is right where it needs to be for a signal to happen. One of these days it most likely will at this rate.

    Stay tuned because we monitor this situation every day until either the HO issues a signal or the threat of a signal dissipates in a big way. Or, as is sometimes the case, the HO becomes neutered due to a rule violation and goes offline... unable to issue a signal no matter what. If that were to occur, I report that also.

    In fact, that possibility is unfortunately all too real, and will become a big issue, especially around Jan. 9th. So stay tuned.

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  41. Thanks for the update AR...I was worried about ya...it's not like you to be so quiet :)

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