Thursday, August 8, 2013

Hindenburg Omen Fires off 3rd Volley in 4 Days

Just a quick update. As readers are aware by now, the Hindenburg Omen fired off a new signal on Monday [when I wasn't looking because it was a holiday in Canada :-) ]

As I reported that evening, with the most recent HO signal having occurred on June 19th, the Monday signal could have been considered as part of a larger cluster that began back in June.  But then the HO issued another signal on Tuesday in which there were considerably more new lows generated than new highs.  And today, yet another signal has occurred.  No matter how we want to classify this cluster, the message is the same... that although the NYSE ($NYA) is still officially rising (as determined by the fact that the 50 day MA on the NYSE is rising), there is still a horrid degree of polarity that the HO was designed to detect and issue its alerts on.

So what happens next?  If you haven't read the answer to that question yet... you can find it here.  In brief... it's not necessarily the end of the world.  In fact there is a 73% chance that there will not be a major stock market crash.  Gotta think positively, right?

So there you have it... HO signals issued on August 5th, 6th, 8th, 9th,13th and 14th, 2013.

Just a reminder....
 How fast can a bubble pop?  Faster than the blink of an eye!

43 comments:

  1. 'Strike 3 !'


    Mr Market..you are OUT!
    --


    Seriously though, it is getting kinda interesting out there. So long as we don't go breaking any new index highs, bears have a real chance here.


    I see Zerohedge is all over the HO again, and Dr Doom/Faber is calling for a 20% drop.



    Sp'1400s look next to impossible...even though I'm trying to hold the following scenario in mind...


    Have a good evening.

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  2. Fed Up With The FedAugust 8, 2013 at 3:04 PM

    Thinking positively about a 27% chance that there will be a major decline in these equity markets.

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  3. Fed Up With The FedAugust 8, 2013 at 3:23 PM

    Albertarocks-Do you know anything about the Heisenberg Indicator?

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  4. Damn HO is about as reliable as an ex wife. Anyway, I am thinking gap fill (I am still holding half of some calls I bought). Target was 1710-11 before but we fell short by a little. Bounce in the NYMO today but the 19 still lower than the 39 on the ema's so tomorrow should help some with direction. Tough area in here and can't help but wonder why we are consolidating in no mans land. Need a hard sell to start flattening out those larger daily ma's. I am sure miners and metals helped with some of that signal today. 1457 was a number but I am also looking lower to 1290 and have been. This of course was before we hit 1700 so easily. Thanks for update AR it's nice to see ya posting :)

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  5. Thanks buddy... it's nice to hear your voice as well. The only posting I'm doing is about the HO, and that's just out of a sense of duty since I started reporting on it about 4 years ago on Seeking Alpha. And the only reason I started back then was because everybody else was getting it entirely wrong, lol.

    I'm so busy these days working with my son on something new, exciting and lucrative that I have no more time for markets... not as long as the Fed continues to paint this absolutely incredible illusion, setting up the pensioners and general working stiff/investors for the greatest theft in the history of humanity.

    As far as the HO "being reliable"... it makes no predictions. All it does is alert us about when the market is much more dangerous than it appears on the surface. And then all we can do then is to check to see what happened in these identical instances in the past... and go with the odds. So you're entirely right, it is indeed possible that the markets are just consolidating in no-man's land... a situation made possible by the fact that the Fed hasn't lost control of the bond markets just yet. If they do... Dow 7,000 would be entirely possible.

    Take care my friend... I wish I could rekindle my interest in the markets but it's gotten to the point where they just bore me and are far, far too dangerous to mess with. By the way, the HO went off again only moments ago, lol.

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  6. The HO has issued another signal this afternoon... the 4th in 5 days. It's not something that people should ignore, that's for sure. Don't think a crash is coming? Then don't short the markets. But whatever you do, stand aside at the very least.

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  7. Fed Up With The FedAugust 9, 2013 at 12:03 PM

    Certainly appears to be another HO for number 4 this week with 119 new highs and 99 new lows as of 2PM EST.

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  8. https://twitter.com/InterestRateArb/status/365836573675233280/photo/1



    Heh sharks are circling....

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  9. Thanks AR, I appreciate you keeping us informed. Markets very unstable here

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  10. This H.O. will probably be a little more interesting than the last one.I still have to think that QE saves the day and contains the decline.(10% ?).I kind of figured we d do this again real soon after the June occurence.Whats your estimate on a decline AR?

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  11. Hey there buddy. How have you been? As you probably noticed I'm not commenting on anything else any'where' else these days. I'm just doing this HO stuff out of a sense of duty to my friends who I've been doing it for for 4 years over on Seeking Alpha. The markets piss me off and I've become so busy with other things in life that I'm having a ball elsewhere. I'm sure I'll get lured back to the markets at some point but not until some form of reality re-emerges somewhere down the line. They're just too freakin' dangerous for both bulls 'and' bears thanks to the global banking pigs. Imagine that... they've made it an open policy that for every country where there is a central bank, when that country gets into bond trouble they're going to declare banking holidays and rob the people blind. They've stated that publicly and yet the public just accepts it. Makes me wonder WTF is wrong with citizens of earth these days? I'm sure glad I'm not one of 'em. Anyway, hope you're doing well and stayin' safe :-)

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  12. I'd just be making a guess on the depth of the decline because until the bankers actually and truly lose control, they're going to do everything in their power to keep it climbing... against all logic. IOW, they're trying to destroy the currencies which would normally make the price of 'everything' rise. Yet they're fighting the deflation monster who is much stronger than the bankers are. Net result... they're pushing on a rope when they print money... it's not working. So if the deflation scenario does actually emerge (I think it 'has to' but the bankers' illusion is so incredibly convincing) eventually I think the markets could decline 70% easily. But that's not to say such a huge decline happens soon or quickly... eventually and over time. I'd say the deflation scenario would take at least 4 years to complete... possibly much more than that.

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  13. You should maybe change your middle/last name to Hindenberg.
    ---
    re: citizens of Earth. Hmm, indeed.


    If there are other advanced species out there, our planet must make for one hell of a twisted entertainment show. Imagine the students in the room for 'Whats happening on Earth' class. Perhaps the most bizarre and self-destructive group of sentient creatures in the galaxy.


    Incredible times.

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  14. re: Whisker.


    There is no doubt the world system came within a few hours of imploding in Sept'2008. There is a classic cspan video of some US congress/senate person confirming it.


    You have to credit the Fed with managing to persuade the 'big money' not to exit, although of course, its just delaying the inevitable 'reset/reboot'.
    --


    ps. another 5-7 HOs in the coming days/weeks, and I think even the cheer leader maniacs on clown finance TV might start to get a bit twitchy.

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  15. It s a shame if it happens that way.Governments usually grow enough fingers to plug all the holes in the dikes(so far).I m thinking the warning shots of a big decline will get louder and more pronounced over the next 6 months.The first indicator of tapering is supposed to be announced on Aug 29th,I believe.The Fed will announce their bond purchases for September.Maybe we sell into that--or after.That seems to be the catalyst.Everytime QE ended,we had a substantial correction.

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  16. Thanks AR, I completely understand. It's hairy out there. Just s/t trading for me with very limited risk exposure. Appreciate you keeping us informed. Cheers, Mars

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  17. on the recent cluster of Hindenburg Omen (HO) Signals http://www.amateur-investor.net/AII_Weekend_AnalysisAug_10_13.htm

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  18. Fed Up With The FedAugust 13, 2013 at 10:09 AM

    98 New Highs-138 New Lows-#5 Hindie today? That will be 5 over 7 trading sessions.

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  19. Fed Up With The FedAugust 13, 2013 at 11:26 AM

    Some are arguing that the new lows are not a fair representation because it consists of many bond etf funds munis-etc that are hitting 52 week lows. Even if that is the case, it still isn't a good thing for equity markets that interest rates continue to spiral higher.

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  20. I ve heard that as well.It may sound simplistic but the market will decide if this will be ignored or not.The more people try to downplay it...the more feaseable it becomes.Its possible QE overcomes all.If they don t taper(announcement on Aug 29th)all crash indicators get delayed again.

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  21. Yes sir. Another signal today, and as you correctly pointed out... the fifth in the last seven sessions.

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  22. Those who are making that argument are not aware of the rule changes that the developer of the HO put into place about 3 years ago. He increased the required minimum number of new highs and lows in order to make it harder for the HO to go off. And he did it for the exact reasons you mentioned. So in effect, by increasing the number of highs and lows from 2.2% to "2.8% of issues that 'were not unchanged'", he make the HO exactly 27.27% more difficult to go off.


    Some may argue "well, that's not enough". And of course that topic could be debated until year 2325.

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  23. Thanks David... that's a great charts. And just for the record, the HO 'did' issue another signal today, the 5th in the past 7 trading sessions.

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  24. hmm, 5 of 7...pretty interesting, and somewhat suggestive that the 1709 high will be tough to break.


    Another 1 or 2..before the week is out..and that should set up the second half of August !

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  25. HO frequency ( number of signals in cluster historical )



    http://www.marketoracle.co.uk/Article5334.html

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  26. Hi AR. Been following you for a long time from PL's site. I was just wondering if you--or any one else on here interested in the HO--has ever looked at using an inverse of the HO for sniffing out bottoms. I don't have the charting tools needed, but would think that only a couple tweaks to the HO parameters would be needed to generate said signal. For instance, require that the NYSE be below (rather than above) the 50 day MA, more new highs than new lows, etc. It would be interesting to back-test this and see how well it would have predicted major market bottoms. Will also be very useful if/when we do get a major correction. Thanks.

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  27. Hi LAB. Yes, I was asked that question about two years ago on Seeking Alpha and we went into considerable discussion about it. My argument was that I doubted an "inverse HO" or whatever we'd want to call it would work because the market dynamics always favor "upside" action. In other words, there are forces at play in the form of "bankers" and "hedge funds" who have a vested interest in doing all they can to be applying constant upside pressure on markets.


    In other words, when a normal healthy market is cruising along with organic gains being achieved through the process of true growth in the economy, we wouldn't find any bankers or any hedge funds doing anything other than jawboning the markets ever higher and applying their incredible leverage tools to ensure that it did climb higher. But on the flip side of that coin, we "never" see bankers or hedge funds applying pressure for 4 or 5 years in a row to impart "downside" to the markets. Therefore, market tops are more of a "process" than an "event", a process that even the strongest bankers and hedge funds are finally unable to prevent.


    Market bottoms on the other hand are an entirely, entirely different animal. Market bottoms finally happen not only within a week, or within a single day, they usually end with some sort of tremendous spike downward in a single one hour time period and suddenly... that's it. A major long term bottom is in and from that point forward every weapon in the arsenal is launched by those same bankers and hedge funds to impart "upside pressure" and off she goes, never to return to those lows again (perhaps for decades... or maybe "ever").


    So I do not believe that the same dynamics would apply at a bottom as they do at a top. Sure, we could simple reverse all the HO rules and try to apply them to market bottoms, but I don't think the rules would work at all... particularly the requirement of a minimum of 2.8% of stocks making new 52 week lows and the same number (at least) making new highs.


    I admit though, I have never done any back-testing on the topic. Probably because I have so much conviction that it wouldn't work well that I'd probably never set aside the time to do it. But the next best thing would probably be something like Marty Zweig's breadth thrust indicator. It doesn't work at all like the HO but what it 'does' do is identify an swing in the market breadth of absolutely enormous size... within a very short period of time. I honestly think that indicators is plenty good enough.

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  28. Thanks for that link... I hadn't seen that one. Although the author Dr. Robert McHugh I'm very familiar with. We've had a few email exchanges in fact and he's a good guy. He has done more research on HO events than anybody I know, although to this day he's still using the old rules of 3 years ago. So he has made declarations in the past year of HO events when in fact it hadn't gone off at all. Nevertheless, he still is the best resource I know of. Thanks again.

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  29. Thanks for the very informed response AR. I agree that the psychology behind the HO makes a lot more sense in the topping process vs. the bottom. I will take a look at the Zweig breadth thrust indicator. Definitely seems like it is more suited to the job. I also appreciate your continued updates on the HO despite your respite from the markets. Best of luck to you on your new endeavors.

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  30. Fed Up With The FedAugust 14, 2013 at 10:17 AM

    Looks like we well en route for #6 today, but close-85 new lows-187 new highs.

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  31. yeah, I tweeted at 11:00 that it had already gone off today. Haven't mentioned it here yet... until now. I'll add it to the list of HO dates up in the post as well.

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  32. Fed Up With The FedAugust 14, 2013 at 12:36 PM

    That's the source I was using as well-Ooops-It should have read 187 new lows and 85 new highs-sorry 'bout that-Interesting how new lows and new highs both expanded during the rest of the session.

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  33. Noun, Of prophetic significance.

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  34. "Interesting how new lows and new highs both expanded during the rest of the session."


    What I found interesting too was while that was happening, the new lows increased at twice the rate new highs did. On every HO signal day that happened.

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  35. Fed Up With The FedAugust 15, 2013 at 9:57 AM

    Probably no HO today with only 14 new highs at 11:55AM EST. However, it is interesting to note how the new lows (368) have continued to expand even as the volume let up in the markets and this little mid day retrace rally. Has the shades of 1987.

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  36. Gold up...stocks down.How low can we go?

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  37. Why should my son work in Ontario?​ http://www.sunnewsnetwork.ca/sunnews/straighttalk/archives/2015/01/20150106-070913.html

    "People and companies looking to build their - and our - future, might look more favourably on Alberta, Saskatchewan or Texas."

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