This is the continuation of a discussion on the Hindenburg Omen which was originated by our friend John Lounsbury over 2 and a half years ago. Again, we offer a great big "thank you" to John for having maintained this series of instas for over a year and a half, until I finally learned how to create one by myself and take this endeavor off his hands.
The preceding blog can be read here. For further reference, or to read about actual Hindenburg events we have covered including the near misses which occurred in the "week before" and the "day of" the flash crash, the entire series began with John's original post which can be found here.
First of all, I offer my sincere apologies to readers for having accidentally reverted the last insta on the HO topic back to 'draft' form. I didn't realize I had done that. However, I 'do' remember having come into the editing room to update the chart. SA had made a few changes to the editor, changes which I'm not particularly enamoured with, and since I no longer write articles nor instas on SA, when I ventured in here I wasn't quite as familiar with the surroundings as I had been originally. Bottom line... I didn't notice the final "publish" button way, way down at the bottom of the page. I didn't click it. Needless to say I'd prefer not to think I'm an idiot, but when the evidence for that conclusion builds it's time to sit yourself down and give it some thought.
[My friends were saying the link to the last insta quit working. I need to think a few things over.]
In any case, thanks to the notification from FPA and the persistence and patience of our friend K202 we were able to get the previous insta back on line. Special thanks to those two fellas... Mark for his "staying on the case" and FPA for having gone to the trouble to contact SA to find out what the problem was. Thanks guys :-)
Here's the latest 'picture' of what the NYSE is doing and showing where the HO stands from the perspective of whether or not it's obeying the rule that its 50 day moving average must be rising. As you can see, that moving average turned lower last week and the NYSE is struggling mightily to get back above its price of 50 days ago (orange line):
[Click here for a for a live and updating version. I try to keep it updated each day.
Obviously it's been very quiet in here in recent weeks, a reflection of the fact that there has been very little to report about on the HO front. The numbers of new 52 week highs had been rising normally throughout the early stages of the rise off the November low. But as we got into the first week of February the average number of new highs began to decline markedly. In the chart below, we smooth out the statistics a little bit by focusing on the white 7 day moving average of new highs:
[Click here for a version which updates each day shortly after the market closes.]
Really, there nothing overly ominous with the chart above other than the fact that the numbers of new highs had begun to deteriorate markedly in early February even as the markets chugged ever higher. Obviously that divergence had to lead to 'something', either an improvement in the market internals where more stocks suddenly started to turn higher - OR - a correction in equities. Normally it would be the latter and that's indeed what occurred this time as well.
The question staring all of us in the face today is whether or not the correction has run its course and we head higher from here. The chart above, as well as many other charts pertaining to market internals could indeed support the notion of higher prices from here. But since that's not the purpose of the Hindenburg Omen indicator, we won't try to answer that question in this particular room. Besides, ever since Goldman Sachs purchased the rights to "logic" and has banned it's use, nobody knows where the markets are headed. Nobody but god that is and he's not telling... he's too busy at the helm of the FED, carefully guiding the good ship Earth into the iceberg that lies dead ahead. And of course, as was the case for the Titanic, I fear that the "rudder hard-a-port" command is going to arrive way too late.