Could someone save me from many wasted hours and just explain what the hell an “Hindenberg Omen” is…
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by John Cole| 66 Comments
This post is in: Free Markets Solve Everything
Could someone save me from many wasted hours and just explain what the hell an “Hindenberg Omen” is…
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Wiki very helpful
Voodoo. There are now millions of people out there that think the DJIA is an etch a sketch that draws little pictures that will tell the future if only you can find someone who knows how to read goat entrails to look at the WSJ.
This, I assume, is a referance to the rise of hitler under the then German leader Hindenberg.
Ok, so one is the offical answer but I like mine as a second possible oman for the thugs
Looks like it’s a dire prediction of stuff on the stock market (via Wikipedia). Why it’s just finance is sort of beyond me at the moment, because it seems to me that something like “The Titanic is unsinkable!” would also be a Hindenburg Omen, so to speak.
What’s the context that you’re hearing this in?
Well, on the left side of the page is a SwimOutlet.com ad, and on the right side is a Victoria’s Secret ad, so there’s four Hindenburgs right there.
@Sentient Puddle: Type it into google news.
I heard about this, too. But Barry Ritzholtz at the Big Picutre said it was a load of crap, and I respect his opinion greatly, so I never bothered to find out what a Hindenburg Omen is. Apologies for my epistemic closure.
licensed to kill time
It all started when a kid named Damien went up in a zeppelin…
5 criterion that have accurately predicted stock market meltdown. We met all five last Thursday. If we hit all 5 again in the next 40 days, history says it’s game over.
A prediction that something will crash and burn, just like the dirigible.
my McClellan Oscillator is set to sawtooth, 1000Hz, in a sine envelope with period 2 sec.
it’s annoying as hell.
It’s the latest M. Night Shyamalan movie. Spoiler: The blimp burns at the end.
It’s about this.
It seems to me that our current world is filled with chickenshit everywhere you look. I haven’t quite figured this out. My grandparents lived through the Depression, and then WWII. Saw Pearl Harbor, watched the Jap planes from their back yard. Saw the whole family split asunder by the war.
Lived through it, prospered, conquered adversity.
How did we become a nation of scared shitless wimps who run from their own shadows, recoil at the building of a mosque, look for signs of stock market downturns and cringe in fear?
I ain’t afraid of no stinking terrorists or stock market plunges. Or immigrants. Or even Republicans.
Oh Christ, now that I read more about what these things are, this sort of thing just looks like meta-bullshit:
You know what else happens before stock crashes? The prices start going down. WHY DON’T WE POSTULATE A LAW BASED ON THAT OBSERVATION!
Now we’re going to get all kinds of traders panicking because of some sign derived out about five or six steps, and because of this irrationality, the market will crash in a self-fulfilling prophecy. God I love the stock market.
From teh Wiki:
“Because of the very specific and seemingly random nature of the Hindenburg Omen criteria, it is possible that this phenomenon is simply a case of overfitting.”
I didn’t realize that dicking around with Excel is now considered prophecy.
Where are you hearing about it?
Don’t take this personally, but when the general population starts taking about technical stock market indicators (like the death cross hoopla of a few weeks ago), it usually means that it’s not going to work anymore.
It’s like JP Morgan’s shoeshine boy, or Bill Kristol’s analysis.
“technical analysis” is numerology. Nothing more, nothing less. I agree with @MikeJ above – it’s basically the same as reading goat entrails, but it’s couched in financial speak to trick rubes into believing it’s not bullshit.
I thought the Wright Model B was an bi-plane not a dirigible. And does the Hindenberg Omen beat a Pig Formation? What about a Full House?
@licensed to kill time:
With the number 666 marked on its side.
@jrg: Any time you hear someone say “head and shoulders pattern” run far, far away.
The Hindenberg Omen is……RAHM’S FAULT.
The hell you will. You’re going to get all sorts of traders looking for the Hindenburg Omen to be pimped because they’re waiting to pounce on depressed stocks.
It’ll balance out.
Not to suggest for an instant that the market won’t crash for more substantive reasons, of course.
Via Neo on an early post.
What Does Hindenburg Omen Mean?
A technical indicator named after the famous crash of the German airship of the late 1930s. The Hindenburg omen was developed to predict the potential for a financial market crash. It is created by monitoring the number of securities that form new 52-week highs relative to the number of securities that form new 52-week lows – the number of securities must be abnormally large. This criteria is deemed to be met when both numbers are greater than 2.2% of the total number of issues that trade on the NYSE (for that specific day).
Investopedia explains Hindenburg Omen
Traders use an abnormally high number of 52-week highs/lows because it suggests that market participants are starting to become unsure of the market’s future direction and therefore could be due for a major correction. Proponents of this indicator argue that it has been very accurate in predicting sharp sell-offs in the past and that there are few indicators that can predict a market crash as accurately.
licensed to kill time
And as the HIndenberg goes down screaming “Look at me, Damien! It’s all for you!” that’s when the market crashes.
Oh the humanity!
From what I’ve been able to find in the past two minutes, it’s market confusion. No one knows what to do. And so, when the boiling point is reached, they sell, fast.
kdaug was right
It was mentioned on the Nightly Business Report(Friday), I was going to follow up on it. I had not remembered the span between events, and dire results. Supposed.
It was about the bond market setting a record for highest, then lowest numbers, I think.
Read the source on McClellan’s comments:
@Cermet: Why would the thugs want a second Oman?
Obviously you have never worked for a district sales manager.
But maybe this and hearing John Cole’s voice may be indicative of something really scary.
@DickSpudCouchPotatoDetective: I agree! We are afraid of the sun, dairy, eggs, salt, the ocean, random germs, our kids being kidnapped, sex predators, brown people…on and on and on. That’s why I can’t stand to read most womens’ mags anymore.
A young but insightful woman once said to me, “Have you ever noticed that most of what is on the local news is meant to scare the mothers of young children?”
One time a relative and I took our kids somewhere, and for a minute or two they weren’t right under our nose. The relative said, “What if they are kidnapped?” I said, “They would bring them back! Are you kidding? WE can’t even get them into the car!” Our kids were like Ransom of Red Chief on steroids!
The counterargument to tech analysis being numerology is that the price trajectory of securities is a self-fulfilling prophesy.
Therefore if enough people believe in something, and adjust their buy-sell behavior as if it is true, they actually cause it to happen.
e.g. If enough speculators believe the market is about to crash, and start selling…. then it will crash.
This explains how phenomena like astrology, that you might not normally believe in, might still be worth checking in financial markets. The problem is not do you believe in it, but rather do enough other players believe in it? Markets are moved by human mass-psychology.
@beltane: That’s also the first place I looked when Cole brought it up. And much like Cole, I love it when he trolls his commenters (anti-Randian or anti-goldbug stuff is always good for a laugh).
Me and my friends went to see Scott Pilgrim this weekend and they had the trailer for his new movie.
It had all the setup for a weird thriller set in an elevator and then it displays “FROM THE MIND OF M NIGHT SHAMAYLAN”… and instantly, everyone in the theatre groaned.
Then they started laughing at everyone groaning. And then they laughed some more when the title “DEVIL” came up.
The Hindenburg Omen is a cheesy ’70s movie starring George C. Scott and Gregory Peck about a Nazi zeppelin who’s the spawn of Satan who blows up mysteriously after cutting off David Warner’s head. In New Jersey.
Oh this brings back memories. I used to watch some stock market technical analysis show hosted by a guy named Gene Morgan for fun and relaxation.
It was just amazing how he could pull up all these graphs that explained historical patterns and market trends …
But couldn’t predict what the market or any particular stock was going to do the next hour. Or the next day. Or the next week. Or ever.
And yet apparently numbers of people signed up for the market newsletter peddled by his firm.
Oh, well now it all makes sense.
I didn’t read anywhere that the HO is supposed to be causative. If every single crash the last 25 years was preceeded by one or more HO, it might be predictive for the mass-psychology reasons stated above by several people. However, there are plenty of objective reasons why the market might tank, including the soon-to-be-released report on housing stock (predicted to be awful), continued lousy unemployment numbers (predicted to stay awful), persistent inability of gov’t at the national level to function well, trade imbalances, falling dollar… there’s really no shortage of crappy economic news.
Before Enron fell and the stock market crash of 2008, I don’t remember people talking about the “Hindenberg Omen”. Please correct me if I’m wrong.
It’s even better than that. Get a “technical analysis” guy and give him an actual historical graph with a chunk removed from either end, or even from the middle (showing him the remaining parts), and then look at the result if he’s willing to attempt to fill in the missing part, or look at the even more significant result if he’s not. :-)
It reminds me of the joke when Bush was touting hydrogen fueled autos: two scientists are looking at a prototype and one says “what shall we call it?” To which the other replies: “the Hindenburg?”
@jrg: I had a broker client who had a couple of advanced engineering degrees and was considered a top expert in technical analysis. After working with him for some time, I’m more convinced than ever that technical analysis is bullshit.
“The Hindenburg Omen” sounds like a bad 1970s movie.
Technical analyses like these aren’t useless, but they aren’t as predictive as some people pretend they are. The key is to get to what nightshift66 is alluding to – the chart tells us something might be happening, something that in the past has sometimes followed by a crash. Once you’re alerted to the possibility that something might be happening, you then need to do the hard work of figuring out what (if anything) is happening. If you can understand that, then you can probably make a reasonable determination of what might be coming up. Too many technical guys rely on the squiggly lines and forget to do the hard part.
My sense of things now is that the economy isn’t recovering. Many industries that are dependent on consumer spending either directly or indirectly don’t look like safe investments now and are selling lower. OTOH, any money coming out of the market has to go somewhere and there aren’t many decent places to put it. Bond rates suck. Commodities are suffering from some of the same problems with consumer spending. Money instead is flowing into industries that are generally impervious to consumer spending or into those that are showing surprisingly good growth and profits. Some of those are taking on bubble-like qualities (gold, for example) because money is rushing into them disproportionate to any real underlying value. (This is what they’re looking for with the 52 week high/low contrast.) The reports the last few days that the next housing/GDP numbers are going to seriously suck is helping to drive this.
If at some point there’s a real event that shocks what the market has been treating as ‘safe’ – a rapid decline in gold or any of the industries doing well in the market, then you might see that kind of crash with money now pulling out of the areas that have been holding up the market, nobody willing to invest in the ones that previously looked bad and now look horrible, and basically money just being taken off the table and held as cash. That’s more-or-less what happened in late 2008. But something real needs to trigger this. It doesn’t just happen because of a squiggly line, and it needs to hit the right place.
Still problematic and unworkable. Because even if there were something to this, then you would want to directly chart “investor sentiment” or come up with some variable which would approach a sell signal. But all the gobbledy gook of technical analysis never provides an unambiguous “buy” or “sell” signal.
Astrology is never true and never works or explains anything.
Aaaaand our government, your job, your 401(k), your home equity, are all at the mercy of these idiot fucks.
If I recall my history correctly, the japs bombing Pearl Harbor scared the shit out of most of America. Seems it was closer to true hysteria than run-of-the-mill teabagger/Fox News pantswetting. Hundreds of thousands of American citizens of Japanese descent — often entire extended families — were rounded up and thrown in concentration camps for years because of the nation was running scared shitless.
And the lower-level pantswetting about ‘the other’ had been going on in the US for more than a half-century — the Yellow Peril and other xenophobic garbage had been peddled by Hearst newspapers and others for years before the forced internments of the 40s.
I suspect the pantswetter/moran contingent of Americans has been pretty constant — it’s that 27% thing. It remains to be seen if the morans now have a larger, even more disproportionate effect on the nation than their moran forebears did 50 years ago.
This is a scary article from Zero Hedge:
There Will Be No Double Dip… It Will Be A Lot Worse
And this was found in the comments, written back in May 2009:
The Worst Case Scenario (Someone Has to Say It)
It sounds legitimate to me. If the Republicans make large gains in the elections…
Oh, you’re old. You’re so old. You realize that hardly anyone younger than 45 knows that story…
@JohnR: Yeah, you’re right!
BTW up on Alternet now–Bedbugs!!!
This is true in the same way that reading your horoscope in the paper can cause you to notice what’s happening in your real life, and therefore take positive action.
An alternative strategy is just to try to pay attention all the time. Or if that doesn’t work for you, you could try an honest source of prods to look, like Oblique Strategies or the I Ching.
But if you don’t have an aversion to bullshit, then by all means keep on with the squiggly lines and/or position of the planets.
Shorter answer: Because they can’t help themselves.
Too many lack the critical thinking abilities to figure out what’s up, and too many are too fucking bigoted. Makes ’em especially susceptible to pantswetting.
Shorter shorter answer: Because the Baby Jeebus wants us to be that way.
Seriously, if you have people who insist the earth is 6,000 years old, or who drink collodial silver until they turns blue because they are suspicious of antibiotics and vaccinations, or that they believe they will be raptured up to heaven soon and are on the lookout for the Mark of the AntiChrist, then everything else falls into place as far as explaining why such people have trouble with facts and empiricism and critical thinking, and why if they become influential enough can really fuck up the nation with their insistence on shadowy portents and signs.
[edited for pronoun trouble]
Worst Omen movie sequel evah!
Here is a neat trick if you are using the Firefox browser. Highlight the word or phrase that you want to find information for, right click and select “Google Search”. The results will appear in a separate Window and almost always provide several good definitions and a Wiki hit.
In a nation where 1% of the population owns 50% of the common stock and as much money as the bottom 90% economic recovery is impossible. And yet that is what we have today. The average has nothing to do with how money is spent because the average is so far removed from most people as to be useless as a number. If Bill Gates is in the room with all of us the average wealth is something close to $45Billion/100 – does that mean we each have a few million to spend? Smart retailers are already giving up on average and looking for ways to sell increasingly expensive items to an increasingly small group.
I think it’s because there are so many dire warnings. Every issue that’s come up has been accompanied by all kinds of doomsday scenarios — very few of which are even plausible.
Here’s one example I heard on NPR last week: In June 2009, 286 flights were delayed by more than 3 hours, with passengers getting stranded all over the place. The government announced it was going to institute new regulations to stop this. Airlines said the regulations should not be changed and warned that customers would be inconvenienced even more than they already were because the new rules would cause many flights to be canceled. New rules were put in place anyway, and as it turns out, for June 2010, the number of flights remained the same as in the previous year, but only 3 violated the new rules. So much for all the dire predictions.
The Scott Pilgrim audience I was in didn’t even have the intermediate groaning stage… as soon as MNS’ name appeared on screen there was open, mocking laughter.
The sad part is Devil might actually be OK, since he neither wrote it nor directed it – it’s just based on an idea of his that someone else than ran with. But it won’t matter — his name is poison now. His career’s basically over.
That second one is quite stupid.
Catboxx has an explanation: Hindenburg Omen
Numerology makes more sense then that pile of BS.
Stuff like the Hindenburg Omen is always around: there are always, always doomsday predictions floating around. I’m sure much of the appeal comes from a feeling that in a real doomsday event, ordinary laws and rules go right out the window and everyone can do what they like (though the same people who sort of play with such scenarios are aware they’re fantasizing, and that a real doomsday would be their own doom as well).
The difference now, insofar as there is one, is that the level of economic insecurity and fear is higher than it’s been since the Depression. Over 10% unemployment means more than the raw numbers: it means 30 million Americans are looking at the ruin of everything they’ve built for themselves and their families. There’s no resilience in the system anymore. The government’s financially broke and systemically dysfunctional, Big Business is a big part of the problem (and refuses to do anything to ameliorate it), and small businesses are hanging on by the skin of their teeth.
That means the doomsday stuff actually feels very real to too many people. They believe in doomsday because they’re already living it.
After 14 months out of work, I finally did find a job – one in my field that pays well, though not nearly what I was making before. I empathize with people feeling hopeless and desperate, because I was feeling that way. (Not that I feel particularly safe and secure now; I don’t.)
Things are bad. Things are really, really bad… and there is no indication that they’re going to improve. Ever. (Someone – I think Nate Silver? – ran some numbers and said we would need to create something like 12 million jobs right now to be back where we were before 2008. 12 million jobs? There’s just no way.)
That’s why the Hindenburg Omen is a big deal.
As someone somewhere noted- a Hindenburg Omen has predicted 20 of the last 5 stock market crashes.
How dare you ignore the jabbering warnings of the mindless media! Don’t you know you’re in DANGER? RUN! RUN FOR YOUR LIVES! DANGER! DANGER, WILL ROBINSON!
How dare you refuse to soil yourself with fear. Your masters in the media have spoken. They need you to keep watching, terrified, as they explain each new horror that looms, pausing only for ads hawking asswipe and armpit goo.
Refusing to stand in a warm puddle because of the dire warnings of our media savants is practically un-American.
Cringe, serf, cringe!
5 criterion that, IF they happen again within a certain time frame indicates there’s a 3 in 4 chance of losing more than 5%…
So…a 75% chance of what, at least a 5%+ drop, of which there’s a 40% chance of it being over 10%, and a 25% chance of it being 20%+ (I’m guessing about their definitions of panic sellout and major market crash). IF its confirmed with another one then there’s about a 19% chance of losing 20%+…unless the signal doesn’t work this time for some reason (either with a false positive or a false negative).
I’ll call it useless.