The 'Hindenburg Omen' is the ominously-titled list of five separate indicators linked to the New York Stock Exchange. When these events occur at the same time, have historically warned of an impending crash.
In fact Zero Hedge describes the Hindenburg Omen as:
Easily the most feared technical pattern in all of chartism (for the bullishly inclined.
What is it? The Hindenburg Omen describes when the daily number of New York Stock Exchange listed 52 week highs and the daily number of 52 week lows both exceed 2.2% of all the issues traded.
On 10 August, trading in new highs and new lows both exceeded that level. A high school physic teacher first described the Hindenberg omen.
The Omen is largely based on Norman G. Fosback's High Low Logic Index (HLLI). 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 Omen itself is said to have originated with Jim Miekka, and the name was suggested by the late Kennedy Gammage.
From historical data, the probability of a move greater than 5 per cent to the downside after a confirmed Hindenburg Omen was 77 per cent. the drop usually takes place within the next forty days.
The probability of a panic sellout was 41% and the probability of a major stock market crash was 24%. The Omen does not have a 100% success rate and there have been false positives.
source: http://en.wikipedia.org/wiki/Hindenburg_Omen
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