The theory is largely based on Norman G. Fosback's High Low Logic Index (HLLI).[2] The value of the HLLI is the lesser of the NYSE new highs or new lows divided by the number of NYSE issues traded, smoothed by an appropriate exponential moving average. The theory itself was promoted by Jim Miekka,.[3]
Mechanics
The pattern functions on a combination of technical factors that attempt to measure the health of the NYSE, and by extension, the stock market as a whole. The goal of the indicator is to signal increased probability of a stock market crash.
The rationale is that under "normal conditions" a substantial number of stocks may set either new annual highs or new annual lows, but not both at the same time. As a healthy market possesses a degree of uniformity, whether up or down, the simultaneous presence of many new highs and lows may signal trouble.
Theoretically, it could be applied to any stock exchange.
Criteria include:
The daily number of NYSE new 52-week highs and the daily number of new 52-week lows are both greater than a threshold (proposed at 2.8%)
The NYSE index is greater in value than it was 50 trading days ago - 50-day Rate of Change (ROC) should be positive. Originally, this was expressed as a rising 10-week moving average, but the new rule is more relevant to the daily data used to look at new highs and lows.
As a rule, the shorter the time-frame in which the conditions listed above occur, and the greater the number of conditions observed in that time frame, the stronger the effect. If several—but not all—of the conditions are repeatedly observed within a few weeks, that is a stronger indicator than all of the conditions observed just once during a 30-day period.[4]
See also
VIX, Chicago Board Options Exchange Market Volatility Index
References
^Russolillo, Steven (August 23, 2010). "Yes Folks, Hindenburg Omen Tripped Again". The Wall Street Journal.
^Morris, Gregory (2005). The Complete Guide to Market Breadth Indicators: How to Analyze and Evaluate Market Direction and Strength, p. 219. McGraw-Hill. ISBN0-07-144443-2.
hindenburg, omen, proposed, technical, analysis, pattern, named, after, hindenburg, disaster, 1937, created, miekka, believed, that, predicted, stock, market, crashes, contents, history, mechanics, also, referenceshistory, editthe, theory, largely, based, norm. The Hindenburg Omen was a proposed technical analysis pattern named after the Hindenburg disaster of May 6 1937 It was created by Jim Miekka who believed that it predicted stock market crashes 1 Contents 1 History 2 Mechanics 3 See also 4 ReferencesHistory EditThe theory is largely based on Norman G Fosback s High Low Logic Index HLLI 2 The value of the HLLI is the lesser of the NYSE new highs or new lows divided by the number of NYSE issues traded smoothed by an appropriate exponential moving average The theory itself was promoted by Jim Miekka 3 Mechanics EditThe pattern functions on a combination of technical factors that attempt to measure the health of the NYSE and by extension the stock market as a whole The goal of the indicator is to signal increased probability of a stock market crash The rationale is that under normal conditions a substantial number of stocks may set either new annual highs or new annual lows but not both at the same time As a healthy market possesses a degree of uniformity whether up or down the simultaneous presence of many new highs and lows may signal trouble Theoretically it could be applied to any stock exchange Criteria include The daily number of NYSE new 52 week highs and the daily number of new 52 week lows are both greater than a threshold proposed at 2 8 The NYSE index is greater in value than it was 50 trading days ago 50 day Rate of Change ROC should be positive Originally this was expressed as a rising 10 week moving average but the new rule is more relevant to the daily data used to look at new highs and lows As a rule the shorter the time frame in which the conditions listed above occur and the greater the number of conditions observed in that time frame the stronger the effect If several but not all of the conditions are repeatedly observed within a few weeks that is a stronger indicator than all of the conditions observed just once during a 30 day period 4 See also EditVIX Chicago Board Options Exchange Market Volatility IndexReferences Edit Russolillo Steven August 23 2010 Yes Folks Hindenburg Omen Tripped Again The Wall Street Journal Fosback Norman 1979 20 Stock Market Logic ISBN 0 917604 48 2 Morris Gregory 2005 The Complete Guide to Market Breadth Indicators How to Analyze and Evaluate Market Direction and Strength p 219 McGraw Hill ISBN 0 07 144443 2 Investopedia Hindenburg Omen entry Retrieved from https en wikipedia org w index php title Hindenburg Omen amp oldid 1068773353, wikipedia, wiki, book, books, library,
