Since we have been covering general market indicators over the past few weeks and the media has been giving the "Hindenburg Omen" some attention, I wanted to post some quick details on what it is and how it works.
One note; Any one using the Stockbee Market Monitor is already in cash or short. Our trading behavior over the next few weeks should not change based on any media speculation or hype. It’s business as usual.
According to Market Breadth Indicators by Gregory L. Morris,
Jim Miekka provided a significant indicator of market danger. The Hindenburg Omen is a sell signal that occurs when NYSE new highs and new lows each exceed 2.8 percent of advances plus declines on the same day. In addition, the NYSE index must be above the value it had 50 trading days (10 weeks) ago. Once the signal has occurred, it is valid for 30 trading days. During the 30 days the signal is activated whenever the McClellan Oscillator (MCO) is negative, but deactivated whenever the MCO is positive.
I didn't have much luck recreating the indicator in StockFinder, but I did find some detailed information over at Stockcharts.com. According to Chip Anderson from Stockcharts.com we have had an "unconfirmed" signal.
How to interpret the charts: