Hindenburg Omen Settles Right Down - But Far From Relaxed

UPDATED APRIL 15, 2013 -Well folks, there's an hour to go and the NYSE has generated 88 new 52 week highs and 80 lows.  If the market generates five more lows today's going to be the day we see the first real Hindenburg Omen signal since August 2010.  Any and all other signals you may have seen reported since then have been absolutely bogus for various reasons.  The key reason being that those doing the reporting of HO signals are either not aware of the very strict rules or are interpreting them improperly.  In fact several times we have seen reports that the HO went off when the indicator wasn't even online.  It wasn't even allowed to issue a signal due to any number of violations of its own rules.  Those situations were very much like watching a television that wasn't even plugged into the wall.  Today there will be no such violations so it appears highly likely that we're going to see the first legitimate signal in over two and a half years.
If a signal is issued, I will publish a follow-up post after the market closes.


UPDATED APRIL 05, 2013 - At the close today it is becoming abundantly clear that the market has become very polarized with a few stocks trying to pull the NYSE uphill (and not enough of them at just 93) and half as many horses trying to pull it downhill.  With that many horses tugging to the downside it's pretty obvious that those pulling to the upside have one hell of a battle ahead of them.  In other words, the HO is just passing on the message that the odds of any great upside from here are pretty slim and the odds of a pullback are increasing daily.  How much of a pullback you ask?  The HO has no way of knowing that nor is its purpose to offer advice on that topic.  But what it can do is to simply show us what happened on all the previous occasions when the HO did issue a signal.  Those statistics have been available on this blog for over a year now on the tab at the top of the page entitled "So The HO Issues A Signal. What Happens Next? "

UPDATED APRIL 03, 2013 - As mentioned in yesterday's update, it wouldn't take much of a crack in the markets to get the HO sitting up in its chair with increased interest.  At the closing bell the WSJ reports 122 new 52 week highs being recorded (with 86 required today) and 48 new lows.  That number of new lows is about double what occurred yesterday and is marching toward the required 86.  The market internals are now hanging around right in the HO's wheelhouse.  This is definitely the atmosphere where a HO signal is possible.  Not necessarily "likely", but absolutely possible.  In other words, please don't necessarily "expect" a Hindenburg Omen signal tomorrow or Friday or next week, but don't be surprised if it happens either.

UPDATED APRIL 02, 2013 - Just a very short update because I imagine a lot of people are beginning to wonder if the HO is sending any messages these days.  The answer is this:  There are still too many new 52 week highs being generated although the number is still very anemic for a market that is at or near all-time highs.  That's very weak.  But on the other hand, the number of new 52 week lows is too small to trigger a signal although it is growing daily.  Any sort of sharp turnaround over the next few days or weeks would no doubt set the HO up so that it starts to really pay attention.  Right now though it's just monitoring, in the knowledge that the market is far weaker than it looks, but not weak enough to get overly alarmed about (at least from the perspective of the HO).  Stay tuned.  As well, if and when the HO does go off I will publish an article on that event on the day it happens.

UPDATED FEB. 25th, 2013 - Just a very short update to point out that as I mentioned on Friday, "... if the markets were to get another massive uplift courtesy of the Fed for whatever reason then the HO would just sit back and monitor the situation without too much concern."  I used the word "massive" and that was unnecessary.

In any case, that is exactly what we're seeing today and as a result the number of new 52 week highs is beginning to climb to more reasonable levels for a market that is so close to all-time highs.  What I found alarming last week was the suddenness with which the number of new 52 week highs plunged when the market pulled back.  In a healthy market, a relatively sharp pullback of 2% like that which we witnessed at the beginning of last week does not normally decimate the number of new 52 week highs like that.

As it stands this morning, with a snap-back rally off Thursday's low being nearly as sharp as the entire decline itself was, the number of new 52 week highs, although much higher today, are still dangerously low for a market that is so close to all-time highs.  In fact, as of this very moment they are still within the range that could theoretically set the HO off.  I do not expect that to happen over the next few days though even if the market were to finish slightly in the red today. The bottom line is that although things seem relatively calm for now, the HO has still got a bit of a buzz on indicating that the markets are not out of danger territory in the slightest.  

We'll continue to monitor the situation on a daily basis but will refrain from making needless updates to this post on an hourly basis.  So please feel free to bookmark this page and check in whenever you like.  Better yet, I've just got hooked up with Twitter and I'll twit a message to all the other twits out there when I do update this particular post.  I've been trying to install a "follow@AlbertarocksTA" button on the blog but without success so far.  However my good and helpful friend JW at TrendXplorer was kind enough to send me an email this morning with instructions on how to do that.  So hopefully I'll get that done today or tomorrow.  In the meantime if you'd like to receive a tweet when I update this post, please feel free to follow @AlbertarocksTA on Twitter.

EDIT:  BINGO!  And just like that, JW at TrendXplorer comes to my rescue yet again.  Thank you so much JW, your instructions were impeccable and now the 'follow' button has been installed at the top right hand corner of the blog.  Thanks again :-)


UPDATED FEB. 22ND, 2013 - For those who have decided to check in for updates, here's what is going on at the moment.   The main factor that the HO watches for is the number of new 52 week highs and lows generated in any given day on the NYSE.  The minimum number required for each is 2.8% of the total number of issues that traded that day and changed in value.  In other words, issues that are unchanged on the day are ignored.  So on each day the number of new highs and new lows required does fluctuate a bit.  But generally speaking it's usually about 85.  At this very moment that number is 84.

As of 1:30 Eastern there have been 87 new highs generated, so that condition has been met.  Just to give you a bit of perspective on that topic, in a healthy market those numbers generally end up anywhere between 250-600.  Today, even though the NYSE is very near an all-time high, only 87 new highs is nowhere near the number of new highs that the market usually produces when it is healthy.  That's what the HO is looking for.

But with the big bounce today the number of new lows only sits at 14.  Yesterday that number ended up at 42.  The same minimum percentage of new lows is required as well so in order for the HO to go off today, we'd need to see 70 more lows generated today.  And of course it would take a big sell-off here before we'd see that happen.  So even though there are plenty of stocks hanging around within 2% of their own 52 week low, it's not likely that the HO would issue a signal today.  Suffice it to say that if the markets were to get another massive uplift courtesy of the Fed for whatever reason then the HO would just sit back and monitor the situation without too much concern.  It would be prudent though to recognize that even though the HO might not issue a signal, as long as we're seeing so few new highs being generated the markets are somewhat polarized with as many horses trying to pull the wagon downhill as those pulling it uphill.  Not a healthy market environment at all.  We'll keep you posted with fairly minimal updates... just when it gets really dicey.



UPDATED FEB. 21ST, 2013 -  Just adding this update to inform readers that the number of new 52 week highs had, until Tuesday, still been very healthy.  That metric has changed in a hell of a hurry and today the numbers for new highs and lows were 62 and 42 respectively.  These are right in the range where the HO is suddenly sitting up and dusting itself off.  The best news is that this time around the HO is in no danger of going off-line any time soon due to a rule violation (regarding the 50 day MA on the NYSE).  We haven't had that luxury the last few times it got close to issuing a signal.

Keep in mind that contrary to 'any and every' report you've read in recent months, the HO has never gone off since August of 2010.  Every single report you might have read, I also read... and every single one of them was in error because in most cases the HO wasn't even on line at the time.  You can't get a signal from your television if it isn't even plugged into the wall, yet some of the other analysts who are not aware of the very strict rules apparently have the ability to watch TV when it's not plugged in.  A cool trick, but I wouldn't trust the news from a TV like that.

So stay tuned, we'll be updating this post as well as my ongoing reports at Seeking Alpha that have been running for 3 1/2 years now.

What follows below is an article I wrote last November.  We're just going to carry on with it right here on this page and supply the updates here in order to provide continuity.  So please feel free to bookmark this page and stay tuned.

UPDATED NOV. 8TH, 2012 -  Just adding this update to inform readers that the close shaves are continuing.  Repeated 'near misses' represent exactly the same type of activity we saw in the market internals just before the last HO signal events.  That shouldn't necessarily be taken to mean that "a signal is definitely coming" because that's not necessarily the case.  Needless to say though, it's certainly fair warning that regardless of whether the HO actually goes off or not, the markets are obviously on very shaky ground at the moment and are very polarized.  At the close of trading today the NYSE had generated 61 new highs and 85 new lows.  Had it produced 86 of each the HO would have issued a signal.  These types of close shaves should be viewed as being 'near misses' because the message they're delivering is still the same... the markets are on very thin ice right now.  On a side note, there was even one popular blog that 'today' reported that the HO has gone off.  It hasn't.  Right on that website, the author quotes the rules required for the HO to issue a signal and as much as I hate to be the bearer of bad news, those rules are 3 years old.  Nonetheless, that's a nice blog and the author is just another in the long list of innocent TA guys who didn't get the memo back when the rules were changed.  Nobody can blame him for that.  To his credit, he is looking at all the right things and is fully aware of the implications.  He's also probably a very nice man and to top if off, he's a Texan.  Texans and Albertans have always gotten along very well, mainly because of interactions concerning the oil business. :-)

==============  original article follows below  ==============

I'd just like to post this heads up that the Hindenburg Omen came about as close today to issuing its first signal since August of 2010 as we're ever going to see without it actually going off.

Contrary to any and all reports you may have read stating otherwise, the HO has not gone off at any time since that instance back in 2010.  A full explanation about why any previous reports that you may have read were absolutely false will be contained in a full article that will appear on this very page when the HO does issue a signal.  It's all those false claims by analysts who aren't even aware of the HO's rules that give it such a bad name.  It's the real deal, I assure you.  So please stay tuned.

Also, please be aware that this type of "near miss" occurred several times in the days leading up to the HO's signal during the week before and the "morning of" the flash crash.  Don't forget to click the tab at the top of this page if you haven't already done so and read about "So The HO Issues A Signal.  What Happens Next?" Awe to heck with it, just click this thing.

It's still possible the HO won't issue a signal at all, especially if there's some solid buying that enters the market tomorrow and thereafter.  It wouldn't take much to change these market internals dynamics for the positive but until we actually see it, rest assured that the market is extremely polarized and fragile right now.  But until the HO actually goes off, why don't you come on up north and we'll do a little surfing, Canadian style.

Surfin' Like A Boss

Please feel free to bookmark this page and check in regularly since the HO is just starting to hum again and any signal it issues at this stage is almost assuredly going to be the real deal.. 

Stay well!