Technical Analysis And The Hindenburg

It appears that the Hindenburg Omen has reared its ugly head. The Hindenburg Omen is a collection of four criteria that, when they occur simultaneously, is used to predict a stock market crash. Technical analysts who believe in the Hindenburg Omen argue that if it occurs twice in a 30-day period, the market is primed for a meltdown. Of course, as with many technical indicators, there is some confusion about how to read the tea leaves. For example, some technical analysts argue that a 36-day period should be used, others argue for 30 calendar days, and others use 30 trading days. And as with many other technical indicators, believers discuss the instances it has worked, such as the 2007 market crash and 2000 tech bubble, and conveniently ignore the times when the Hindenburg Omen was wrong.