The Hindenburg Omen ... hmmmm ... certainly sounds scary, which is probably the point.
Couple of articles on the weekend discussing it:
http://online.wsj.com/article/SB1000...rticle_related (WSJ paid article, you may have to search for it if not a subscriber ... hint: use Google News)
The PragCap post gives the criteria and quotes Wikipedia (Wikipedia, forsooth ... DYOR):
A 5% decline in the ES (Friday's close) would take it to about 1021 ... sometime in the next 40 days ... worth noting that the range of the ES in the 40 (calendar) days preceding Aug 13 has been about 1010 to 1127.Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and 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%.
However, the occurrence of a confirmed Hindenburg Omen does not necessarily mean that the stock market will go down, although every NYSE crash since 1985 has been preceded by a Hindenburg Omen
So, at the least, The Omen (love capitalising it) is calling for a move to, and break of, pretty much the previous 40 day's low, sometime over the next 40 days. Unfortunately 'panic sellout' and 'major stock market crash' are left undefined. Again, DYOR and make your own decisions.
The WSJ further notes:
Again, not many definitions being, ahhh, defined.The Omen was behind every market crash since 1987, but also has occurred many other times without an ensuing significant downturn. Market analysts said only about 25% of Omen appearances have led to stock-market declines that can be considered crashes.
Still, 25% chance of a presumably significant decline sometime in the next 40 days ... worth being aware of.