QuestionsCategory: Learningmcm Hindenburg Omen Calculation
mcm-peterAnonymous Staff asked 4 years ago

Where can I find a formula of your mcm Hindenburg Omen?

Or is it secret?


1 Answers
mcm-petermcm-peter Staff answered 4 years ago

We do not post this formula. It represents a proprietary project and our proprietary tool. We have been considering licensing the tool as a study as the tool also contains a sort of inverse Hindenburg Omen concept which is useful in profiling emotions at bottoms. We as most interested in feedback and your opinions and thoughts. 

Below is more information relating to the calculation of modern Hindenburg Omens:

These criteria are calculated daily using Wall Street Journal figures from the New York Stock Exchange for consistency. (Other news sources and exchanges may be used as well.) Some have been recalibrated by Jim Miekka to reduce statistical noise and make the indicator a more reliable predictor of a future decline.

  1. The daily number of NYSE new 52 week highs and the daily number of new 52 week lows are both greater than or equal to 2.8 percent (this is typically about 84 stocks) of the sum of NYSE issues that advance or decline that day (typically, around 3000).[2] An older version of the indicator used a threshold of 2.5 percent of total issues traded (approximately 80 of 3200 in today's market).
  2. The NYSE index is greater in value than it was 50 trading days ago. Originally, this was expressed as a rising 10-week moving average, but the new rule is more relevant to the daily data used to look at new highs and lows.
  3. The McClellan Oscillator is negative on the same day.
  4. The number of New 52 week highs cannot be more than twice the number of new 52-week lows (though new 52-week lows may be more than double new highs).

The traditional definition requires each condition to occur on the same day. Once the signal has occurred, it is valid for 30 days, and any additional signals given during the 30-day period should be ignored, or one signal does not mean very much, but more than one is a confirmed signal, or five or six are even more important. During the 30 days, the signal is activated whenever the McClellan Oscillator is negative, but deactivated whenever it is positive.
Some users of the omen may choose to view the 30 day limit as "working days" and not "calendar days", arguing that the global finance market works on a weekday (Monday to Friday) schedule—leaving about 100 hours where only limited sharemarket trading takes place.
As a rule, the shorter the time-frame in which the conditions listed above occur, and the greater the number of conditions observed in that time frame, the stronger the Hindenburg Omen. If several—but not all—of the conditions are repeatedly observed within a few weeks, that is a stronger indicator than all of the conditions observed just once during a 30-day period.

Charles Jop replied 4 years ago

Thanks a lot for answering my question

mcm-petermcm-peter Staff replied 4 years ago

You are quite welcome…as this is a passion for us we will likely continue to add to these answers over time and documentation of details as we see them relevant. The reason for implementing this tool was specifically to enable a living document. I can not tell you whether the source code and ruleset for the mcm Hindenburg Omen will be released. But it certainly may knowing the attitude/approach of the developer. So stay in touch and thanks for reaching out to us.