• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Hindenburg Omens Are Piling Up

A classic market warning sign keeps reappearing.
By JAMES "REV SHARK" DEPORRE
Nov 13, 2017 | 02:01 PM EST
Stocks quotes in this article: IWM, ROKU, WUBA

The market action has three main characteristics right now:

  1. The indices are making little progress. The S&P500 had minor losses for the week for the fist time in a while. The dips are still being bought but there has been much upside progress for a couple weeks. Small caps (Russell 2000 ETF  (IWM) ) have acted even worse and haven't see new highs since early October.
  2. The action is narrow. The main reason small caps are lagging is because the average stock is acting much worse than the big caps that drive the indices. Even though the indices are up today there are only about 2850 gainers to 3600 decliners. There are also more stocks at 12-month lows than highs. 45% of stocks are below their 200-day simple moving average.
  3. There are some pockets of very strong momentum. Roku (ROKU) for example is trading up over 30% today and 58.com (WUBA) is up 7.2%.

 As I mentioned in my morning column, the action has triggered something known as a Hindenburg Omen. In theory a cluster of these Omens is deemed to be a negative. On Friday the market saw the 6th recent Omen.

The details of calculation are complex, but an Omen Day occurs when there is a high level of both new highs and new lows on the NYSE. In addition there must be a rising 10-week moving average and the McClellan Oscillator must also be negative. The McClellan Oscillator is a measure of market breadth that is based on the difference between the number of advancing and declining indices.

To put it simply the Omen says there is a danger when there is a cluster of days where the NYSE is trending up but breadth is negative and there are a high level of new highs and lows at the same time. That pretty much sums up this market but speculators are finding things to do and that is the saving grace. Until the pockets of momentum narrow even more and the few big caps stop propping up the indices all we can do is watch and watch for a shift in price action.

There is some good reason for concern, but the Hindenburg Omen sounds much more frightening than the market looks.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Rev Share had no positions in any stocks mentioned.

TAGS: Investing | U.S. Equity | Stocks

More from Investing

Bearish Bets: 2 Nasdaq Stocks You Should Consider Shorting This Week

Bob Lang
Jan 17, 2021 12:05 PM EST

These names are displaying technical deterioration.

KushCo Sprinkles Some Gems on Its Earnings Call

Debra Borchardt
Jan 17, 2021 8:15 AM EST

The cannabis packaging company is looking at Arizona and New Jersey as new markets for growth.

When it Comes Time to Sell, Will You Act or Will You Freeze?

James "Rev Shark" DePorre
Jan 16, 2021 10:00 AM EST

Why don't more people embrace the ease and power of selling stocks? Why do they freeze and do nothing as losses build?

Cybersecurity Stocks that Lagged in 2020 Could Get Boost from SolarWinds Hack

Eric Jhonsa
Jan 16, 2021 8:00 AM EST

The hack stands to drive an uptick in corporate and government spending to protect both on-premise and cloud assets.

Hungry Traders and Stock Opportunities Aren't Likely to Go Away Soon

James "Rev Shark" DePorre
Jan 15, 2021 4:40 PM EST

It doesn't take much time for stocks with strong momentum to reset and continue on their way.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • 08:35 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/13/2021

    Lower highs... SPX (Long-Term View) The 1/8/2...
  • 08:07 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/12/2021

    Watch if the recent trend of lower highs continues...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login