Today was Day 1 of a Hindenburg Omen signal -- one of the most elaborately constructed T/A signals and as its name indicates perhaps the most ominous of all signals. It is named after the Hindenburg airship disaster of 1937. Its primary distinguishing characteristic is a larger number of new highs and new lows on the same trading day which is considered abnormal and indicative of future turbulence and a possible change of direction may be imminent.

For those that don't remember the Omen last summer that proceeded the market selloff as we discussed then while not infallible the Hindenburg Omen has a good track record of predicting declines. It is not a signal to be frivolously dismissed. According to one T/A source:

"Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen within the next 41 days after its occurrence was 77%, the probability of a panic sellout was 41% and the probability of a major stock market crash was 24%. 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."

To be valid a Hindenburg Omen must be confirmed by a second such day within 36 days of the first omen day. Tomorrow is thus Day One.

Until confirmed there is no need to Panic or to use UH's lead-in phrase for the month send out a "May Day". However please don your life jackets and women and children should proceed to the lifeboats.