UPDATED May 10th, 2012
|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).|
UPDATED Apr. 10th - Just with a simple comment in the comments section.
UPDATED MAR. 6th -
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
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 to. This 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