Hindenburg Omens: Technical Indicator Warns of Imminent Stock Market Crash

by marketcurator

A well respected technical indicator known as the ‘Hindenburg Omen’ is  flashing a big red warning sign that a significant market sell off – even a  market crash – could be imminent.

The Hindenburg Omen, named after the Hindenburg disaster in the 1930s, is a  technical analysis pattern which has a strong history of successfully predicting  market crashes. According to Wikipedia:

From historical data, the probability of a move greater than 5% to the  downside after a confirmed Hindenburg Omen was 77% [The Wall Street Journal  8/23/2010 article cited below states that accuracy is 25%, looking at period  from 1985], and usually takes place within the next forty days. The probability  of a panic sell-out was 41% and the probability of a major stock market crash  was 24%. Though the Omen does not have a 100% success rate, every NYSE crash  since 1985 has been preceded by a Hindenburg Omen. Of the previous 25 confirmed  signals only two (8%) have failed to predict at least mild (2.0% to 4.9%)  declines.

With a track record like that investors should sit up and take note when  analysts report the biggest cluster of Hindenburg Omens on record. Although the appearance of a  Hindenburg signal does not necessarily indicate a market sell-off, the more  occurrences cluster together in a short space of time the more likely it is that  there will be a significant correction….

Read more at http://marketcurator.com/hindenburg-omen-technical-indicator-warns-of-imminent-stock-market-crash/#ioaS6vj5I2ibhJAw.99

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