Thursday, August 15, 2013

What Alphaville Thinks of the Hindenberg Omen

August 15 1940 has been referred to as the Luftwaffe's Black Thursday because, losing the air war of attrition for the first 37 days of The Battle of Britain, the German's tried for a knockout blow and failed.
Today the Brits (rather, the FT) shoot down the Hindenberg.

From FT Alphaville, August 15, 2013:
What this guy said:
“It’s just a technical signal that is far better for sound bites and articles than it is for investment purposes,” says Adam Grimes, chief investment officer at Waverly Advisors. “It does come around turning points, but it also just comes at random points in the market – a lot.” …
“If you had shorted the market on each signal, then what we find is that, frankly, like most technical signals, it’s the same as flipping a coin,” says Mr Grimes.
That’s from this entertaining piece by Tracy Alloway and Arash Massoudi.
Back on August 17 (missed it by two days) 2010 we posted:
Thanks Alphaville: "Testing the Hindenberg Omen"
Although CXO Advisory is one of our 1300 feeds and one I try to get to at least twice a week I somehow missed this. FT Alphaville didn't.
First CXO goes through the methodology of their test, in-depth as always, then:
...In summary, evidence from simple tests of a publicly available set of “confirmed” Hindenburg Omens suggests the possibility of usefulness, but reservations regarding small sample size and potential sample bias are strong.
The vivid image evoked by the name may be an important factor in media attention to the Hindenburg Omen.
Gee, d'yuh think?
FT Alphaville also directs us to an interesting story of attempted 'corners'....
I had to post their Omen story because of a blind link I put into our earlier "You May Have Wondered Why We're Not Posting on Equities":
 ...We had some slight negativity on TSLA a week and 15 bucks ago, a market comment and that's about it for August....
The second link goes to:
Equities: Another Day, Another Hindenberg Omen