The HO darned near went off again today. There were 74 new highs recorded but 86 were required. New lows? There were enough... 356.
Had the HO gone off it would of course have just been another redundant signal. But the message is the same... with these phoney rallies the market internals are actually deteriorating at a rather alarming rate. As Forrest Gump said: "To each, his own caca smells sweet. Do not be fooled by this."
No. All signals after the second one are redundant. They only 'reconfirm' that the market is still very polarized but they 'do not' give us any clues about the depth of any decline that will probably follow.
It's actually possible that there might only be a single signal without any confirmation in the form of a second signal, and yet the market could decline any amount... 20%, 30%. And the next time we could theoretically see 6 or 7 HO signals and the market only falls by a small amount, like 5% for example.
A good analogy would be a pressure gauge on a boiler. Once it goes into the red it's saying "there's likely to be an explosion". But that gauge has no way of giving advice about how big that explosion might be... just that the odds are high that there is going to be one. Maybe just a seam on that boiler gives way and there's a heck of a lot of 'bleeding off'. In that case the 'explosion' might only be 3 or 4%.
Just as a matter of interest, the HO went off again today although it's really a redundant signal. Nonetheless it's reconfirming that although the market has put in a rebound of sorts, nothing has changed internally... the polarity that the HO is so concerned about is still there.
Now that the HO has issued a signal I feel like I can really take my eye off that topic and just kick back and relax for a while. Yup, I think it's time to do just that: http://bit.ly/19McBeW
Here's a rare opportunity amigos. An interview with Jim Meikka himself (creator of the HO): http://on.wsj.com/ZOEnWt
Do you have any idea how rewarding I find it that Mr. Meikka confirms that the only two signals recently are the ones I reported on. HOOWAA!
Unfortunately though, that article is a debunking article cleverly disguised as an interesting human interest story. Just read the nonsense Adam Grimey said.
You're welcome H.N.T.L. You're welcome Mr. Ferguson and all of you who are Stilldazed.
You know, I even commented to a friend on my own blog the other day that the only reason I still write about the HO at all is "out of respect for my old friends over at S.A."
It's true... if it weren't for you people who read this insta, I would have quit writing about the HO a few years ago. In fact, I wouldn't even have started writing about it if J.L. hadn't said that he always wanted to know "somebody who knew about the HO", or something to that effect. I started commenting on it only because John wrote the first chapter (and several others thereafter) on the HO, and then he just handed the ball off to me. It's John we should thank really. Man, that was about 4 years ago. Who could have known it would run this long?
In any case, on the bright side... the odds are 77% that the big crash "is not" going to happen. And the odds that we'll see a pullback no larger than 8-10% are 50/50. Unfortunately, at some point in time there is a great reckoning that's going to have to happen. I don't know any better than the next guy whether or not we're there at this time. But I think we all have to recognize that at some point in time we're going to have to deal with history face to face. Some day the market top is truly going to be behind us where it will stay for years and years because whether we want to admit it or not, inflation (money creation) just can't go on forever. I have no idea whether we're there yet or not. Maybe another year into the future? That's entirely possible.
I thank you as well my friends. You've always been here to read this crap, lol.
I've got a real sense that you're probably right. The central banks are absolutely determined not to lose control and the only way the markets are going to fully crash is if they have lost control. I just don't get the sense that we're there yet.
With all the respect for you that I can muster, I don't think the dividend situation would make a hill of beans of difference when "the time comes". "The" crash would be for reasons so bad that most of us couldn't even contemplate the final result. I just don't think we're there yet. But some day, when the crash finally 'does' happen, we would end up with dividends a whole lot "more juicier" but stocks would plummet anyway. There would sure be some great buys at the bottom, that's for darned sure... as long as the corporations could still pay big dividends after a 'severe' pullback.
Even just looking at the charts, and at the near parabolic pattern to a lot of them, I just don't see a top yet to be honest. I'm thinking about the old saying that "tops are a process, bottoms are an event". But then I look at a chart of the Nikkei and I can envision a top in that market that is "an event". So hard to know man, but I'm just not envisioning the big crash coming out of this particular HO event.
Ok, there we have it friends. The second signal has gone off. I'll be publishing an article on that in just a few moments. I'll post a link here after I've done that.
I can almost envision Bernanke pumping the legs of the collective taxpayers. What I want to know is which end of the taxpayer is the 'air' exiting from? One is more explosive than the other you know.
Both the WSJ and StockCharts are showing 84 new highs. Two more would give us the first "official HO signal" complete with the second and confirming signal since August 2010.
It would really tick me off if it falls short because surely one of the other analysts out there will declare that it happened. What's a guy to do? Do we adhere to the rules so strictly that we ignore such an incredibly near miss? Or do we call it? After all, there is so much subjectivity connected with the argument about the big increase in bond funds and ETFs over the past few years that one could argue that that subjectivity alone is a greater factor than missing by just one or two new highs. Geez... what a nuisance. I'm seriously torn about what to do here. Hopefully the market will just shove the new highs up to 90 and I won't have to worry about it.
Amazingly, the Nasdaq is looking stupidly strong with 136 new highs and only 13 new lows. Gawd almighty, what in hell is going on here? Those numbers for the $NDX have been stuck there for a long time. I'm wondering if they are the numbers from yesterday? Doesn't matter really... we're not focusing on the $NDX anyway. Just an interesting observation.
Wow! The market is selling off and the number of new highs is still stuck at 79 (StockCharts is confirming). The late day surge yesterday nearly set the HO off as well. Maybe it's not going to happen today after all. Those last 5 or 6 new highs might be nearly impossible to attain with the downside starting to accelerate like this.
EDIT: Here they are... 81 now and counting. But now 86 are required, lol.
It looks like the HO is almost assuredly going to go off again today folks. With half the trading session remaining, the NYSE has generated 78 new highs and 113 new lows. Only 84 highs are required today (that number always varies by one or two issues depending on how many stocks have traded and how many of those are 'unchanged').
If it happens, the discussion about whether or not the recent signal of May 31st was the second signal that confirmed the April 15th signal will become a moot point, because at the end of today we will have the second HO signal in 4 calendar days. Today's signal will therefore give us only the second "official HO signal" since August of 2010. In other words "it's game on" and we're about to get a rather rare opportunity to see if the HO still works in the face of central bank intervention. I honestly don't know what to think about that.
Geez... the HO darned near went off again with the late day surge. Quite a few new highs emerged at the end of the day and finished at 76. New lows ended up at 246.
Hindenburg Omen - November 13, 2012 [View instapost]
Had the HO gone off it would of course have just been another redundant signal. But the message is the same... with these phoney rallies the market internals are actually deteriorating at a rather alarming rate. As Forrest Gump said: "To each, his own caca smells sweet. Do not be fooled by this."
Hindenburg Omen - November 13, 2012 [View instapost]
Hindenburg Omen - November 13, 2012 [View instapost]
It's actually possible that there might only be a single signal without any confirmation in the form of a second signal, and yet the market could decline any amount... 20%, 30%. And the next time we could theoretically see 6 or 7 HO signals and the market only falls by a small amount, like 5% for example.
A good analogy would be a pressure gauge on a boiler. Once it goes into the red it's saying "there's likely to be an explosion". But that gauge has no way of giving advice about how big that explosion might be... just that the odds are high that there is going to be one. Maybe just a seam on that boiler gives way and there's a heck of a lot of 'bleeding off'. In that case the 'explosion' might only be 3 or 4%.
Hindenburg Omen - November 13, 2012 [View instapost]
Hindenburg Omen - November 13, 2012 [View instapost]
http://bit.ly/19McBeW
Hindenburg Omen - November 13, 2012 [View instapost]
http://on.wsj.com/ZOEnWt
Do you have any idea how rewarding I find it that Mr. Meikka confirms that the only two signals recently are the ones I reported on. HOOWAA!
Unfortunately though, that article is a debunking article cleverly disguised as an interesting human interest story. Just read the nonsense Adam Grimey said.
Hindenburg Omen - November 13, 2012 [View instapost]
You know, I even commented to a friend on my own blog the other day that the only reason I still write about the HO at all is "out of respect for my old friends over at S.A."
It's true... if it weren't for you people who read this insta, I would have quit writing about the HO a few years ago. In fact, I wouldn't even have started writing about it if J.L. hadn't said that he always wanted to know "somebody who knew about the HO", or something to that effect. I started commenting on it only because John wrote the first chapter (and several others thereafter) on the HO, and then he just handed the ball off to me. It's John we should thank really. Man, that was about 4 years ago. Who could have known it would run this long?
In any case, on the bright side... the odds are 77% that the big crash "is not" going to happen. And the odds that we'll see a pullback no larger than 8-10% are 50/50. Unfortunately, at some point in time there is a great reckoning that's going to have to happen. I don't know any better than the next guy whether or not we're there at this time. But I think we all have to recognize that at some point in time we're going to have to deal with history face to face. Some day the market top is truly going to be behind us where it will stay for years and years because whether we want to admit it or not, inflation (money creation) just can't go on forever. I have no idea whether we're there yet or not. Maybe another year into the future? That's entirely possible.
I thank you as well my friends. You've always been here to read this crap, lol.
Hindenburg Omen - November 13, 2012 [View instapost]
I've got a real sense that you're probably right. The central banks are absolutely determined not to lose control and the only way the markets are going to fully crash is if they have lost control. I just don't get the sense that we're there yet.
With all the respect for you that I can muster, I don't think the dividend situation would make a hill of beans of difference when "the time comes". "The" crash would be for reasons so bad that most of us couldn't even contemplate the final result. I just don't think we're there yet. But some day, when the crash finally 'does' happen, we would end up with dividends a whole lot "more juicier" but stocks would plummet anyway. There would sure be some great buys at the bottom, that's for darned sure... as long as the corporations could still pay big dividends after a 'severe' pullback.
Even just looking at the charts, and at the near parabolic pattern to a lot of them, I just don't see a top yet to be honest. I'm thinking about the old saying that "tops are a process, bottoms are an event". But then I look at a chart of the Nikkei and I can envision a top in that market that is "an event". So hard to know man, but I'm just not envisioning the big crash coming out of this particular HO event.
Hindenburg Omen - November 13, 2012 [View instapost]
EDIT: Here's a link to that article for those interested.
http://tinyurl.com/n8j...
Hindenburg Omen - November 13, 2012 [View instapost]
:-)
Hindenburg Omen - November 13, 2012 [View instapost]
It would really tick me off if it falls short because surely one of the other analysts out there will declare that it happened. What's a guy to do? Do we adhere to the rules so strictly that we ignore such an incredibly near miss? Or do we call it? After all, there is so much subjectivity connected with the argument about the big increase in bond funds and ETFs over the past few years that one could argue that that subjectivity alone is a greater factor than missing by just one or two new highs. Geez... what a nuisance. I'm seriously torn about what to do here. Hopefully the market will just shove the new highs up to 90 and I won't have to worry about it.
Amazingly, the Nasdaq is looking stupidly strong with 136 new highs and only 13 new lows. Gawd almighty, what in hell is going on here? Those numbers for the $NDX have been stuck there for a long time. I'm wondering if they are the numbers from yesterday? Doesn't matter really... we're not focusing on the $NDX anyway. Just an interesting observation.
Hindenburg Omen - November 13, 2012 [View instapost]
EDIT: Here they are... 81 now and counting. But now 86 are required, lol.
Hindenburg Omen - November 13, 2012 [View instapost]
If it happens, the discussion about whether or not the recent signal of May 31st was the second signal that confirmed the April 15th signal will become a moot point, because at the end of today we will have the second HO signal in 4 calendar days. Today's signal will therefore give us only the second "official HO signal" since August of 2010. In other words "it's game on" and we're about to get a rather rare opportunity to see if the HO still works in the face of central bank intervention. I honestly don't know what to think about that.
Hindenburg Omen - November 13, 2012 [View instapost]
Hindenburg Omen - November 13, 2012 [View instapost]