Here is an interesting piece that Drudge linked to, noting that Thursday's stock market statistics had an odd anomoly that has usually preceded a major market crash if it happens twice in a seven-week period.
They call it the Hindenburg Omen after the German airship that caught fire in New Jersey in the 1930s. It had a trifecta of stats
(1) 2% of stocks have to be hitting new yearly highs and 2% of stock have to be hitting new lows. Usually, you don't have a lot of new highs and lows at the same time.
(2) The ratio of stocks going up to stocks going down has to be lower in the last four weeks than in the last eight weeks, but yet greater than one.
(3) The market (the NYSE index in this case) has to be above it's average of the last 10 weeks.
Put those three together and you have the recipe for a crash.
I'm not a big fan of technical analysis, but their might be some real-world reason for this set up.
For the first one, there is a lot of good news and bad news at the same time. Some sectors of the economy are recovering, giving us some new highs for the last 12 months, while the lack of recovery in many sectors plus fear of a double-dip recession might cause vulnerable companies to see new lows.
The second one is possibly marking fear of that double dip. It's noting a deceleration of stock market gains, a negative second derivative for the math geeks in the crowd.
The third one marks a stock market that is on the rise, but not always for long.
Combining the three factors and we have above-average stock price with a rate of movement that is hitting the top of the hill and leveling out, with good and bad news in store for stocks at the same time. One major piece of bad news could have investors screaming towards the exits, for the declining plus-minus ratios has us getting to the top of a roller-coaster hill ready to take the plunge.
They have not had a second Hindy day yet, although Wednesday was close. This will be interesting to watch.