Article Teutonic Trouble?

T2W Bot

Staff member
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Being of Prussian descent, I’ll admit to a certain fascination for all things Teutonic, especially in the field of technical analysis.  One of these is the Hindenburg Omen (HO), a fairly obscure indicator named after the German zeppelin that crashed in a fiery explosion in May 1937.  The urban myth surrounding the HO is that it accurately predicts market crashes. 
The creation of the HO dates to the 1990s and is generally credited to a blind former physics teacher named Jim Miekka who died in 2014.  When the HO flashes a signal it is often front page news in major financial newspapers.
Miekka claimed in a 2011 interview that the Omen has appeared ahead of every market crash in the U.S. from 1987 but he also admitted that not every Omen signal means the market will crash.  As he put it, “not every tropical storm turns into a hurricane.” 
The theory behind the Omen is that at major turning points, divergences begin to develop within the market.  Generally, in a strongly uptrending...

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tomorton

Legendary member
8,408 1,338
Interesting. Heard of the HO before but not seen such a precise description.

If I had US stocks (or any stocks) would I sell them or sell some of them or hedge them or go short when the HO flashed? Absolutely not, I'd have to await confirmation by price action whether the HO flashed or not. But its a good reminder that market sentiment can reverse very quickly and you always need to plan what to do in advance so there is no ambiguity or hesitation when action is needed.
 
 
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