Just for the record...the H.Omen has predicted 4 out of the last 2 crashes...but it does do a good job of alerting one to the possibility of some sort of drop coming. The clustering of signals a few weeks ago worked well.
H.Omen
Started by
tommyt
, Jul 30 2007 11:09 PM
7 replies to this topic
#2
Drano
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Posted 30 July 2007 - 11:17 PM
I believe the actual statistic is 10 out of the last 2 crashes. 
#3
traderpaul
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Posted 30 July 2007 - 11:29 PM
Not picking on you.....When you made a reply like that, you better have the fact and figures to back up your statemet.......FactI believe the actual statistic is 10 out of the last 2 crashes.
Edited by traderpaul, 30 July 2007 - 11:30 PM.
"Inflation is taking place now. Prices may not appear to be rising because they are making packaging smaller. "— Rickoshay
#4
Iblayz
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Posted 30 July 2007 - 11:42 PM
I'm not a McHugh sub or a tout nor do I follow him. But it irritates me to see someone scorned and mocked when they are simply doing their best at what they do (and sticking their neck out big time). I wonder how many of the mockers actually have looked at the numbers. Well here is a snippet from a McHugh posting in Safehaven that I saved many, many months ago along with the link. Maybe some mockers will be rather surprised to see that the man NEVER said that a crash was a HIGH probability after such an omen. So here are the numbers....link follows....give the man a break....he's trying and taking risks.....he's not always right....ARE YOU?
Based upon the five parameters noted above, here's what we found: Confirmed Hindenburg Omens are very rare. Excluding the unconfirmed Hindenburg Omen we have now, April 7th, 2006, there were only 23 confirmed Hindenburg Omen signals over the past 21 years. This is amazing when you consider that during that time span, there were roughly 5,250 trading days. Of those 5,250 trading days where it was possible to generate a Hindenburg Omen, only 166 (3.2 percent) generated one, clustering into 23 confirmed stock market crash signals.
If we define a crash as a 15% decline, of the 23 confirmed Hindenburg Omen signals, six (26.1 percent ) were followed by financial system threatening, life-as-we-know-it threatening stock market crashes. Three (13.0 percent) more were followed by stock market selling panics (10% to 14.9% declines). Three more (13.0 percent) resulted in sharp declines (8% to 9.9% drops). Five (21.7 percent) were followed by meaningful declines (5% to 7.9%), four (17.4 percent) saw mild declines (2.0%to 4.9%), and two (8.6 percent) were failures, with subsequent declines of 2.0% or less. Put another way, there is a greater than 25 percent probability that a stock market crash - the big one - will occur after we get a confirmed (more than one in a cluster) Hindenburg Omen. There is a 39 percent probability that at least a panic or crash sell-off will occur. There is a 52 percent probability that a sharp decline greater than 8.0 % will occur, and there is a 73.8 percent probability that a stock market decline of at least 5 percent will occur. Only one out of roughly 11.5 times will this signal fail. All the biggies over the past 21 years were identified by this signal (as defined with our five conditions). It was present and accounted for a few weeks before the stock market crash of 1987, was there three trading days before the mini crash panic of October 1989, showed up at the start of the 1990 recession, warned about trouble a few weeks prior to the L.T.C.M and Asian crises of 1998, announced that all was not right with the world after Y2K, telling us early 2000 was going to see a precipitous decline. The Hindenburg Omen gave us a three month heads-up on 9/11, and told us we would see panic selling into an October 2002 low.
http://www.safehaven...rticle-4937.htm
Based upon the five parameters noted above, here's what we found: Confirmed Hindenburg Omens are very rare. Excluding the unconfirmed Hindenburg Omen we have now, April 7th, 2006, there were only 23 confirmed Hindenburg Omen signals over the past 21 years. This is amazing when you consider that during that time span, there were roughly 5,250 trading days. Of those 5,250 trading days where it was possible to generate a Hindenburg Omen, only 166 (3.2 percent) generated one, clustering into 23 confirmed stock market crash signals.
If we define a crash as a 15% decline, of the 23 confirmed Hindenburg Omen signals, six (26.1 percent ) were followed by financial system threatening, life-as-we-know-it threatening stock market crashes. Three (13.0 percent) more were followed by stock market selling panics (10% to 14.9% declines). Three more (13.0 percent) resulted in sharp declines (8% to 9.9% drops). Five (21.7 percent) were followed by meaningful declines (5% to 7.9%), four (17.4 percent) saw mild declines (2.0%to 4.9%), and two (8.6 percent) were failures, with subsequent declines of 2.0% or less. Put another way, there is a greater than 25 percent probability that a stock market crash - the big one - will occur after we get a confirmed (more than one in a cluster) Hindenburg Omen. There is a 39 percent probability that at least a panic or crash sell-off will occur. There is a 52 percent probability that a sharp decline greater than 8.0 % will occur, and there is a 73.8 percent probability that a stock market decline of at least 5 percent will occur. Only one out of roughly 11.5 times will this signal fail. All the biggies over the past 21 years were identified by this signal (as defined with our five conditions). It was present and accounted for a few weeks before the stock market crash of 1987, was there three trading days before the mini crash panic of October 1989, showed up at the start of the 1990 recession, warned about trouble a few weeks prior to the L.T.C.M and Asian crises of 1998, announced that all was not right with the world after Y2K, telling us early 2000 was going to see a precipitous decline. The Hindenburg Omen gave us a three month heads-up on 9/11, and told us we would see panic selling into an October 2002 low.
http://www.safehaven...rticle-4937.htm
#5
kaiser soze
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Posted 31 July 2007 - 12:20 AM
Yup, the H-omen cluster signals worked well this time. It is still amazing that there is so much negativity and skepticism towards this indicator, despite its obvious utility in alerting one to changing market dynamics.
As with anything else, I think the omen works best when there other technical indicators flashing red as well. This time, there was the weak A/D line in late June and early July, multiple distribution days and the very weak financials that made the H-omen signal perilous to ignore.
#6
Drano
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Posted 31 July 2007 - 06:38 AM
1) It was a joke. If there is no sense of humor on this site, I just won't make jokes in the future.
2) That "Fact" link is from 2005. Dr. McHugh has made many more spottings of Hindenburg Omens since 2005. The second article posted is from April 2006. Again, more H-Omens since then that have not worked out.
3) On a personal level, he is a fine person and I like him.
Edited by Drano, 31 July 2007 - 06:41 AM.
#7
linrom1
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Posted 31 July 2007 - 07:30 AM
Just how many crashes did we have during the past 21 years? How about since 2003? The indicator is supposed to predict a high probability of a CRASH and not short-term correction. As as crash predictor H. Omen is about as useless indicator as there is.
So just how good is almost a crash, almost as good as nothing.
Edited by linrom1, 31 July 2007 - 07:39 AM.
#8
Iblayz
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Posted 31 July 2007 - 09:06 AM
Just how many crashes did we have during the past 21 years? How about since 2003? The indicator is supposed to predict a high probability of a CRASH and not short-term correction. As as crash predictor H. Omen is about as useless indicator as there is.
So just how good is almost a crash, almost as good as nothing.
Exactly what I was talking about. And wrong. I don't read Safehaven because it seems to have a bearish bent from my perspective. And if I'm right about that I would guess that they tend to publish more bearish articles from certain "prognosticators" than bullish ones (I may very well be wrong about that). But all everybody sees is the man's bearish stuff. I read posts from more than one of his subscribers over the last week that said he was quite bullish in 2003.......but that stuff didn't get hawked and squawked all over the internet now did it? I'm not trying to pick a fight or call anybody names.....I'm just defending someone who seems to have no defenders.....and who, in my opinion, is a fine and decent man who is trying to do a job. Have you ever seen him come to a site like this and take a jab at one of his detractors like some others have done? Again......here are the numbers from HIM.....the omen DOES NOT predict a high probability of a crash.....it just means that the odds are higher than normal. Does "greater than 25% odds" mean high probability?
there is a greater than 25 percent probability that a stock market crash - the big one - will occur after we get a confirmed (more than one in a cluster) Hindenburg Omen. There is a 39 percent probability that at least a panic or crash sell-off will occur. There is a 52 percent probability that a sharp decline greater than 8.0 % will occur, and there is a 73.8 percent probability that a stock market decline of at least 5 percent will occur.
Edited by Iblayz, 31 July 2007 - 09:13 AM.
