I am glad you like my Blog and are zoomed in to news on the Hindenburg Omen. We automatically keep a beady eye on the Hindenburg as one of the Suite of signals we watch on a set of charts.

It takes seven items for the Hindy to trigger, so these are rare beasts. I may be wrong, but it would be an unusually bullish day for it to trigger on all items on the same day and if then it will probably be a spurious trigger. You will recall that this indicator must have at least two signals for it to be valid, and more often than not one needs over four before things are getting to the critical stage. My guess is that we will not see this indicator fire until we are well into a strong Bull Rally again, and I would be really surprised to see it hit again before 2009! But we are fortunate to be able to observe it automatically on our screens, so you will know when it hits for sure.

Best regards, Ian.

I have been reading your blog for many months and have a quick question. Are you still paying attention to the potential Hindenburg Omen signals that could be triggered in the coming days? The New Highs/Lows almost meet the criteria today. The 10-wk MA is flat (or perhaps rising). However, the Oscillator is still positive. It seems to me we are very close to an Omen. What are your thoughts?

Thanks,
Blaine

I have found that a very important hurdle is that the Bollinger Band %B of the VIX Index, must get above the Bollinger Band Bandwidth with AUTHORITY before you will start to see any Fear coming back into the market (the green line coming above the red line in the chart above as I showed ringed with a dotted blue circle). That is why my other two targets I gave you was to look for a Kahuna move in either direction, i.e., a minimum of 0.24 in %B 1-Day Change before you really get to feel the Volatility. The longer the %B of the VIX stays BELOW the Bandwidth, the more the likelihood that the Bulls are in control and vice versa.

You are also right that the McClellan Oscillator and Summation Index are important factors to watch for confirmation of which way the wind is blowing.

This is Earnings Report season so one can get yanked around from Pillar to Post depending on which early reports catch the “Street’s” eye. Last week it was GE, and you are right that although it caused a major hic-cup in the progress of the Bull Rally in a Bear Market, the VIX really didn’t turn much of a hair, i.e. complacency in a word! However, as I write this, INTC has just announced its earnings and the street likes it. Tomorrow we have IBM and Ebay, so there are another couple of “Halo” type stocks that the Street loves to act on, so watch how the wind blows in reaction to these announcements. Its Options Expiration week as well to come so that adds another layer of uncertainty to the equation.

From what I see of this market, the day trading bulls are feasting on a couple of hot Wolf Packs, ie, Agriculture and Chems Specialty, with even the beaten down Transportation – Shipping showing signs of perking up again and until we see breadth in terms of all boats rising with plenty of New Highs swamping the number of New Lows we will dawdle around until there is another major negative surprise to take the market down, and I don’t have to spell out the littany of problems the FOMC is faced with between Inflation, the weak dollar, etc.

The longer this market goes sideways, the market has a chance of repairing, but with the daily volume being relatively low, there are few players willing to call it for a strong push to the upside.

Best Regards, Ian.

You will find a Free Trial of the HGSI Software I use at the top right hand side of this message, or any of the blogs I write. Just click on the “Click here to Order” and follow the instructions.

Now to your other point…it is true that one does not see many large Gaps up or down on the DOW when compared to the Nasdaq. My associate Ron brown feels it is because they do not open all the stocks simultaneously so you will not often see large gaps on the DOW. Gaps are far more noticeable on the Nasdaq.

I’m glad to make your acquaintance and hope you enjoy the blog and the software. Best regards, Ian.