Beware the Hindenburg Omen?

  1. Weirdly, blockchain can’t help combat coronavirus 
  2. Leading ‘UK’ start-ups want a handout too
  3. China’s PMI print doesn’t mean much
  4. Let’s flatten the coronavirus confusion curve
  5. NMC Health: presented without comment
  6. When “commission-free trading” isn’t (really) free
  7. Michael Milken: financial innovator
  8. Oh no, the death-techers are coming
  9. Bitcoin’s “halvening” won’t boost its price 
  10. CEO of JPM, recipient of $bns in state aid, bashes socialism
  11. Trump just made a joke about negative rates
  12. The Witcher is not a freelancer
  13. The ITV M&A fantasy
  14. Blockchain, all over your face
  15. Baillie Gifford: pot kettle black
  16. Is Facebook’s status as the bête noire of political advertising justified?
  17. The Eurosystem might have a fatal flaw. But it’s not this
  18. Venture capital for the ‘forgotten’
  19. The troublesome Trump inside trading claim
  20. The US economy is not recession-proof
  21. Hedge fund bro gonna hedge fund bro
  22. What do women want? Some crypto flavoured mansplaining, apparently.
  23. The Fed’s wishful thinking on inflation
  24. Dalio and Diddy: when genius collides
  25. State-backed crypto is a contradiction
  26. Rejoice! Venture capital wants to pay for your holiday
  27. Are electric vehicles more damaging than diesel? 
  28. The £3bn hole in the Tory manifesto
  29. ArtGo loses its marbles
  30. Are banks really magic money trees?
  31. Will Lagarde’s sneaky tweet change much? 
  32. Can we all calm down about Apple Card’s “gender bias”
  33. UBS’ billionaire boondoggle 
  34. When fast fashion jumps on the eco-wagon
  35. GenX will set central banks’ climate response
  36. The stablecoin anathema 
  37. Masters of the universe, don’t be scared of Elizabeth Warren
  38. Missing: the GE short report
  39. The average lifespan of a fiat currency isn’t 27 years
  40. Lord King: Brexit is no big deal
  41. No inflation? Tell that to my landlord  
  42. Today, in fintech marketing
  43. YouGov’s “blockchain-based” sell-your-own data platform makes no sense (*update) 
  44. Presented without comment
  45. Block.one headed
  46. Ride-sharing apps can’t save the planet (obv)
  47. The WeWork bull case
  48. WeWrite-down
  49. No deal Brexit is not a hedge fund conspiracy
  50. Europe’s digital infrastructure issue
  51. Let’s give a helping hand to Andrew Yang
  52. Anatomy of a malware scam
  53. ARK Invest’s Tesla model gathers dust
  54. A delirious defence of Uber
  55. WeLiquid: Adam Neumann pockets $700m
  56. Yesterday, in efficient markets
  57. The warm fuzzy feeling of indirectly owning Tencent
  58. The best of Morgan Stanley's Adam Jonas
  59. Apple/Tesla: M&A and heartbreak
  60. Did Beyonce make $300m from Uber's IPO?
  61. Bitcoin is the 10-year Treasury of our time
  62. High resolution music is a solution looking for a problem
  63. Amazon is furious about this negative review
  64. Missing: $500bn of American savings
  65. Blockchain for Brexit: a wonderfully terrible idea
  66. The Bank of Hodlers [sic] (sigh)
  67. Behind the curtain at China Ding Yi Feng
  68. An answer to Mark Cuban's question
  69. Crumbs! It's CRYPTO: the movie!
  70. National Beverage Corp loses its fizz, and its mind
  71. Amazon won't spin-off Amazon Web Services
  72. Mensch! Dan McCrum is innocent, ok?
  73. Europe's $1 trillion tax gap
  74. Why online propaganda mobs are an investment red flag
  75. Davos has produced an amazing new guide on precisely how not to think about risk
  76. When the public relations industry does PR for itself
  77. Who wants to be crippled by student debt?
  78. The bitcoin price is wrong
  79. The warm fuzzy feeling of Goldman debt
  80. “Cryptoassets” are crashing again. Is it time to start calling them cryptoliabilities instead?
  81. Puff the tragic cryptowagon smokes out the Mumsnet demographic
  82. Don't write off the public sector
  83. Initiative Q: an elementary pyramid scheme with grandiose ideas [Update]
  84. Moral investments aren't outperforming
  85. No one is killing it in crypto (not even Woz)
  86. Too smooth: the red flag at Patisserie Valerie which was missed
  87. No, the housing crisis will not be solved by building more homes
  88. Sorry Civil, 'crypto-economics' and 'constitutions' won't save journalism
  89. 'Short-termism' isn't a thing, say Fed economists
  90. Coinbase wants to be “too big to fail”, lol
  91. Regulation and innovation don't have to be enemies
  92. Retailers get so lonely around the holidays
  93. Folli Follie: $1bn of fake sales, and what to learn from the debacle
  94. The new green evangelism
  95. Tilray, how low can it go?
  96. The ICO behind the tragic Everest stunt is now “airdropping” tokens from rockets
  97. The broken conversation about financial regulation
  98. The improbably profitable, loss-making Blue Prism
  99. The EM rout is not made in America
  100. Wages and growth and honestly we just give up
  101. Britain's first blockchain-enabled co-working space isn't blockchain-enabled
  102. There is a FIRE that never goes out
  103. The WeWork Garden of Eden
  104. IQE: lumpy 'Apple' sauce at the pricey Cardiff chip shop
  105. There's only so much a central bank can do alone
  106. Eight questions every first-time buyer should ask
  107. MiFID II: not all doom and gloom
  108. Tesla: getting to Q3 profitability
  109. Turkey contagion fears are overblown [Update]
  110. The chance of an inflation shock may be higher than you think
  111. Sorry Tim, the humanity is not being drained out of music
  112. Digital crop circles
  113. What could go wrong here?
  114. Sirius Minerals: money for a hole in the ground
  115. The Bank of England has a strange idea of what QE achieved
  116. One for the ladies...
  117. 'Of course, many ridiculous papers appeared'
  118. Is a change goin' to come?
  119. The capacity's not there yet (and probably never will be)
  120. Musk and Tesla are not inseparable
  121. Libraries, from Carnegie to Bezos
  122. Crypto & government: from anarchy to amity in the USA
  123. 'I'm sorry Dave, I'm afraid I cannot sanction this Series B round'
  124. RBC, through the FANG barrier
  125. Self-help to buy
  126. CFA: Chartered crypto analysts -- updated
  127. The Netflix dilemma -- updated
  128. Fujitsu's new blockchain offering: really cheap or really expensive?
  129. Nothing But the Shirt on Your Back
  130. Universities of Britain: cosying up to crypto is a bad look
  131. How to make a living in the cult of meritocracy
  132. Spotify: Drake-oil salesmen
  133. Oh, the digital humanity
  134. Sports are not markets, predictions ain't investment
  135. Spot the difference, Steinhoff edition
  136. Larry Robbins, a cautionary tale
  137. The node to serfdom
  138. Carney is down with the crypto kids
  139. Samsonite: inventory, excess baggage, and unresolved questions
  140. It might be a long wait for “the equivalent alternative to ICOs”
  141. Don't blame it on the sunshine
  142. In corporate America, brands develop you
  143. One in ten dollars of US housing were anonymous
  144. Should AT&T worry more about its debt?
  145. Who cares if Elon is incinerating capital?
  146. Let’s not try make 'crypto chicks' a thing
  147. Tokens all the way down
  148. Eight-dimensional chess with Elon Musk
  149. A lopsided trade is a good trade, Italian inflation edition
  150. How to buy Italian fire insurance
  151. Atlas bugged
  152. Inflating inflation
  153. Crypto's most devout believers are suffering a crisis of faith
  154. Plus500: past performance is no guide to the future
  155. Noble rot in a shrinking Harbour
  156. In defence of ticket touts
  157. Please don't tell individual investors to buy leveraged loans
  158. RIB Software: the unicorn rainy-day fund
  159. Retail is not dead
  160. Did Soros really give Tesla a “vote of confidence”?
  161. At a crypto conference in New York, it feels like 2017 all over again
  162. Egregious expectations - Intelsat edition
  163. Bitcoin cash is expanding into the void
  164. Stop getting The Flintstones wrong
  165. Bond investors do not care if Argentina is solvent in 100 years
  166. Ubiquiti Networks: of cash and borrowed time
  167. “We're very disappointed in you, Spotify”
  168. 'Sex redistribution' and the means of reproduction
  169. Tesla probably needs to raise capital this year
  170. No entitlement crisis in America
  171. Free cash flow to whom?
  172. Hey crypto bros! Journalism ≠ advertising
  173. Human capital and the jobs guarantee
  174. This is a tech bubble, when's the crash?
  175. The magic of adjustments: ebitla-dee-da
  176. FUD, inglorious FUD
  177. A complex analysis reaches same conclusion as simple one: hedge funds suck
  178. The jobs guarantee and human-capital “nationalisation”
  179. These hedge fund numbers can't be right
  180. The Vomiting Camel has escaped from Bitcoin zoo
  181. Lies, damn lies, and charticles
  182. The world doesn't need more Elon Musks
  183. No, Facebook should not become a nonprofit
  184. Sell all crypto and abandon all blockchain
  185. Immutable ledgers meet European data protection
  186. Amazon is not a bubble
  187. Japan's economic miracle
  188. Have you ever meta crypto joke you didn't like?
  189. Delaware should change its rules to let the light in
  190. Who needs the labels anyway?
  191. Baby Boomers want your family to finance a larger share of their retirement
  192. No, America would not benefit from authoritarian central planning
  193. No one needs to buy Tesla
  194. How to win a debate in the cult of meritocracy
  195. Steinhoff International and the case of Pepkor Global Sourcing
  196. Sorry Jack, Bitcoin will not become the global currency
  197. The “academic’s cryptocurrency” is an elegant waste of time
  198. Cigarettes are the vice America needs
  199. Well that’s one reason to buy yen…
  200. Musicians, don't just blame the labels for your lack of dough
  201. Giving stock away to staff doesn't absolve share buybacks
  202. A penny for Macpherson’s thoughts on the nominal anchor
  203. Monopoly and its discontents
  204. A State of Mind
  205. America is not the least protectionist country in the world
  206. This is nuts, when does Netflix crash?
  207. No Bloomberg, the world's richest people did not lose $114bn...
  208. Someone is wrong on the internet, government employee pensions and passive investing edition
  209. Someone is wrong on the internet, possibly fragile
  210. Someone is wrong on the internet, consumer financial regulation edition
  211. Someone is wrong on the internet: tontine tokens [Update]
  212. Someone is wrong on the internet, road economics edition
  213. Someone is wrong on the internet, wages and the stock market edition

In the world of chart scribbling, when a stock forms a 'cup and handle,' it's forecast to move higher. Here's what the shape looks like, but like most technical analysis, it doesn't always work:

Alternatively, when the short-term moving average falls below the long-term moving average and forms a 'death cross', prepare for a sell-off. This happened to Bitcoin in April (and we all know how that has fared since), as this chart from Coindesk shows:

The Hindenburg Omen, according to its creator Jim Miekka, predicts a spectacular, fiery market crash. That's certainly a helpful thing to know in advance, but the Hindenburg Omen is also, you know, technical analysis. It doesn't always work.

Named after a German passenger airship that caught fire and fell to the earth in 1937, a Hindenburg Omen graph must meet four criteria, per JC O'Hara of MKM Partners:

1) The 10-week moving average of an exchange's composite index is rising.
2) The number of stocks making new 52-week highs and lows are greater than 2.2 per cent of total issues traded in the exchange.
3) The McClellan Oscillator, which measures market breadth by calculating the difference between the number of advancing and declining issues on the New York Stock Exchange (NYSE), is negative.
4) The number of stocks making new 52-week highs in an index are less than twice the number making new 52-week lows.

Investor Jesse Felder, of the Felder Report, points out in a recent blog post a particularly Hindenburg-omenful streak for the NYSE:

Over the past ten days, [ending September 18] this exchange has triggered an omen every day. Such a streak has not happened over at least the past 40 years. This brings the total number of omens triggered on both exchanges over the past month to 15, the most since December of 1999, just before the peak of the Dotcom Mania.

Even more worrying, says Felder, the number of Omens triggered in the past year sits at multi-decade highs. There have been a total of 44, about double that of the early 2000s. Here's his chart showing the one-month, 6-month and 12-month breakdown:

While Felder does acknowledge that the Hindenburg Omen isn't the most effective warning shot for a market crash (the Wall Street Journal says the indicator works less than 30 per cent of the time, which is... not very useful for indicating things), he warns that it does indicate something quite dramatic about the breakdown of equity market breadth that typically precedes broader market troubles.

O'Hara believes there's even less to glean from the recent Hindenburg sightings. As he writes in a recent note, not only do Omens not always indicate a top, but many of the securities on the NYSE index that have made new 52-week lows are American Depository Receipts (ADR), which represent international companies. By his calculations, 360 of the composite's 2,000-plus stocks are foreign listings. And about half of the 100-largest companies are non-US issues. Given the pullback we've seen over the last year in global equities, these ADRs drag down the index.

Here's a chart from Bank of America Merrill Lynch showing just how badly international stocks have fared in comparison to the US:

Just because we can cast aside the Hindenburg Omen does not mean all is well for the (maybe) longest-running bull market in the post-war period. We might worry about Felder's point on market breadth. A handful of technology stocks can't propel the stock market on their own for ever. And, according to BofAML's Michael Hartnett, Jared Woodard and Tommy Ricketts, we're past peak profits and peak policy stimulus by central banks:

The end of excess liquidity = end of excess returns.

Is that ominous? Oh, the humanity.

Related Articles:
What we think about the Hindenburg Omen - FT Alphaville
The bull market is running out of brea(d)th - FT Alphaville
Chart of the year: the South-Korean-exports-global-EPS doom loop - FT Alphaville

  1. Weirdly, blockchain can’t help combat coronavirus 
  2. Leading ‘UK’ start-ups want a handout too
  3. China’s PMI print doesn’t mean much
  4. Let’s flatten the coronavirus confusion curve
  5. NMC Health: presented without comment
  6. When “commission-free trading” isn’t (really) free
  7. Michael Milken: financial innovator
  8. Oh no, the death-techers are coming
  9. Bitcoin’s “halvening” won’t boost its price 
  10. CEO of JPM, recipient of $bns in state aid, bashes socialism
  11. Trump just made a joke about negative rates
  12. The Witcher is not a freelancer
  13. The ITV M&A fantasy
  14. Blockchain, all over your face
  15. Baillie Gifford: pot kettle black
  16. Is Facebook’s status as the bête noire of political advertising justified?
  17. The Eurosystem might have a fatal flaw. But it’s not this
  18. Venture capital for the ‘forgotten’
  19. The troublesome Trump inside trading claim
  20. The US economy is not recession-proof
  21. Hedge fund bro gonna hedge fund bro
  22. What do women want? Some crypto flavoured mansplaining, apparently.
  23. The Fed’s wishful thinking on inflation
  24. Dalio and Diddy: when genius collides
  25. State-backed crypto is a contradiction
  26. Rejoice! Venture capital wants to pay for your holiday
  27. Are electric vehicles more damaging than diesel? 
  28. The £3bn hole in the Tory manifesto
  29. ArtGo loses its marbles
  30. Are banks really magic money trees?
  31. Will Lagarde’s sneaky tweet change much? 
  32. Can we all calm down about Apple Card’s “gender bias”
  33. UBS’ billionaire boondoggle 
  34. When fast fashion jumps on the eco-wagon
  35. GenX will set central banks’ climate response
  36. The stablecoin anathema 
  37. Masters of the universe, don’t be scared of Elizabeth Warren
  38. Missing: the GE short report
  39. The average lifespan of a fiat currency isn’t 27 years
  40. Lord King: Brexit is no big deal
  41. No inflation? Tell that to my landlord  
  42. Today, in fintech marketing
  43. YouGov’s “blockchain-based” sell-your-own data platform makes no sense (*update) 
  44. Presented without comment
  45. Block.one headed
  46. Ride-sharing apps can’t save the planet (obv)
  47. The WeWork bull case
  48. WeWrite-down
  49. No deal Brexit is not a hedge fund conspiracy
  50. Europe’s digital infrastructure issue
  51. Let’s give a helping hand to Andrew Yang
  52. Anatomy of a malware scam
  53. ARK Invest’s Tesla model gathers dust
  54. A delirious defence of Uber
  55. WeLiquid: Adam Neumann pockets $700m
  56. Yesterday, in efficient markets
  57. The warm fuzzy feeling of indirectly owning Tencent
  58. The best of Morgan Stanley's Adam Jonas
  59. Apple/Tesla: M&A and heartbreak
  60. Did Beyonce make $300m from Uber's IPO?
  61. Bitcoin is the 10-year Treasury of our time
  62. High resolution music is a solution looking for a problem
  63. Amazon is furious about this negative review
  64. Missing: $500bn of American savings
  65. Blockchain for Brexit: a wonderfully terrible idea
  66. The Bank of Hodlers [sic] (sigh)
  67. Behind the curtain at China Ding Yi Feng
  68. An answer to Mark Cuban's question
  69. Crumbs! It's CRYPTO: the movie!
  70. National Beverage Corp loses its fizz, and its mind
  71. Amazon won't spin-off Amazon Web Services
  72. Mensch! Dan McCrum is innocent, ok?
  73. Europe's $1 trillion tax gap
  74. Why online propaganda mobs are an investment red flag
  75. Davos has produced an amazing new guide on precisely how not to think about risk
  76. When the public relations industry does PR for itself
  77. Who wants to be crippled by student debt?
  78. The bitcoin price is wrong
  79. The warm fuzzy feeling of Goldman debt
  80. “Cryptoassets” are crashing again. Is it time to start calling them cryptoliabilities instead?
  81. Puff the tragic cryptowagon smokes out the Mumsnet demographic
  82. Don't write off the public sector
  83. Initiative Q: an elementary pyramid scheme with grandiose ideas [Update]
  84. Moral investments aren't outperforming
  85. No one is killing it in crypto (not even Woz)
  86. Too smooth: the red flag at Patisserie Valerie which was missed
  87. No, the housing crisis will not be solved by building more homes
  88. Sorry Civil, 'crypto-economics' and 'constitutions' won't save journalism
  89. 'Short-termism' isn't a thing, say Fed economists
  90. Coinbase wants to be “too big to fail”, lol
  91. Regulation and innovation don't have to be enemies
  92. Retailers get so lonely around the holidays
  93. Folli Follie: $1bn of fake sales, and what to learn from the debacle
  94. The new green evangelism
  95. Tilray, how low can it go?
  96. The ICO behind the tragic Everest stunt is now “airdropping” tokens from rockets
  97. The broken conversation about financial regulation
  98. The improbably profitable, loss-making Blue Prism
  99. The EM rout is not made in America
  100. Wages and growth and honestly we just give up
  101. Britain's first blockchain-enabled co-working space isn't blockchain-enabled
  102. There is a FIRE that never goes out
  103. The WeWork Garden of Eden
  104. IQE: lumpy 'Apple' sauce at the pricey Cardiff chip shop
  105. There's only so much a central bank can do alone
  106. Eight questions every first-time buyer should ask
  107. MiFID II: not all doom and gloom
  108. Tesla: getting to Q3 profitability
  109. Turkey contagion fears are overblown [Update]
  110. The chance of an inflation shock may be higher than you think
  111. Sorry Tim, the humanity is not being drained out of music
  112. Digital crop circles
  113. What could go wrong here?
  114. Sirius Minerals: money for a hole in the ground
  115. The Bank of England has a strange idea of what QE achieved
  116. One for the ladies...
  117. 'Of course, many ridiculous papers appeared'
  118. Is a change goin' to come?
  119. The capacity's not there yet (and probably never will be)
  120. Musk and Tesla are not inseparable
  121. Libraries, from Carnegie to Bezos
  122. Crypto & government: from anarchy to amity in the USA
  123. 'I'm sorry Dave, I'm afraid I cannot sanction this Series B round'
  124. RBC, through the FANG barrier
  125. Self-help to buy
  126. CFA: Chartered crypto analysts -- updated
  127. The Netflix dilemma -- updated
  128. Fujitsu's new blockchain offering: really cheap or really expensive?
  129. Nothing But the Shirt on Your Back
  130. Universities of Britain: cosying up to crypto is a bad look
  131. How to make a living in the cult of meritocracy
  132. Spotify: Drake-oil salesmen
  133. Oh, the digital humanity
  134. Sports are not markets, predictions ain't investment
  135. Spot the difference, Steinhoff edition
  136. Larry Robbins, a cautionary tale
  137. The node to serfdom
  138. Carney is down with the crypto kids
  139. Samsonite: inventory, excess baggage, and unresolved questions
  140. It might be a long wait for “the equivalent alternative to ICOs”
  141. Don't blame it on the sunshine
  142. In corporate America, brands develop you
  143. One in ten dollars of US housing were anonymous
  144. Should AT&T worry more about its debt?
  145. Who cares if Elon is incinerating capital?
  146. Let’s not try make 'crypto chicks' a thing
  147. Tokens all the way down
  148. Eight-dimensional chess with Elon Musk
  149. A lopsided trade is a good trade, Italian inflation edition
  150. How to buy Italian fire insurance
  151. Atlas bugged
  152. Inflating inflation
  153. Crypto's most devout believers are suffering a crisis of faith
  154. Plus500: past performance is no guide to the future
  155. Noble rot in a shrinking Harbour
  156. In defence of ticket touts
  157. Please don't tell individual investors to buy leveraged loans
  158. RIB Software: the unicorn rainy-day fund
  159. Retail is not dead
  160. Did Soros really give Tesla a “vote of confidence”?
  161. At a crypto conference in New York, it feels like 2017 all over again
  162. Egregious expectations - Intelsat edition
  163. Bitcoin cash is expanding into the void
  164. Stop getting The Flintstones wrong
  165. Bond investors do not care if Argentina is solvent in 100 years
  166. Ubiquiti Networks: of cash and borrowed time
  167. “We're very disappointed in you, Spotify”
  168. 'Sex redistribution' and the means of reproduction
  169. Tesla probably needs to raise capital this year
  170. No entitlement crisis in America
  171. Free cash flow to whom?
  172. Hey crypto bros! Journalism ≠ advertising
  173. Human capital and the jobs guarantee
  174. This is a tech bubble, when's the crash?
  175. The magic of adjustments: ebitla-dee-da
  176. FUD, inglorious FUD
  177. A complex analysis reaches same conclusion as simple one: hedge funds suck
  178. The jobs guarantee and human-capital “nationalisation”
  179. These hedge fund numbers can't be right
  180. The Vomiting Camel has escaped from Bitcoin zoo
  181. Lies, damn lies, and charticles
  182. The world doesn't need more Elon Musks
  183. No, Facebook should not become a nonprofit
  184. Sell all crypto and abandon all blockchain
  185. Immutable ledgers meet European data protection
  186. Amazon is not a bubble
  187. Japan's economic miracle
  188. Have you ever meta crypto joke you didn't like?
  189. Delaware should change its rules to let the light in
  190. Who needs the labels anyway?
  191. Baby Boomers want your family to finance a larger share of their retirement
  192. No, America would not benefit from authoritarian central planning
  193. No one needs to buy Tesla
  194. How to win a debate in the cult of meritocracy
  195. Steinhoff International and the case of Pepkor Global Sourcing
  196. Sorry Jack, Bitcoin will not become the global currency
  197. The “academic’s cryptocurrency” is an elegant waste of time
  198. Cigarettes are the vice America needs
  199. Well that’s one reason to buy yen…
  200. Musicians, don't just blame the labels for your lack of dough
  201. Giving stock away to staff doesn't absolve share buybacks
  202. A penny for Macpherson’s thoughts on the nominal anchor
  203. Monopoly and its discontents
  204. A State of Mind
  205. America is not the least protectionist country in the world
  206. This is nuts, when does Netflix crash?
  207. No Bloomberg, the world's richest people did not lose $114bn...
  208. Someone is wrong on the internet, government employee pensions and passive investing edition
  209. Someone is wrong on the internet, possibly fragile
  210. Someone is wrong on the internet, consumer financial regulation edition
  211. Someone is wrong on the internet: tontine tokens [Update]
  212. Someone is wrong on the internet, road economics edition
  213. Someone is wrong on the internet, wages and the stock market edition
Copyright The Financial Times Limited 2020. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

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