One of the favorite chart indicators of the bears and the doomers out there is the aptly named Hindenburg Omen. Just before Faber’s interview on CNBC, the Hindenburg cluster had been sighted three times in the last four days.
The Omen is largely based on Norman Fosback’s High Low Logic Index. It is said to portend a stock crash. Most market observers see the omen as a work in progress indicator and imperfect at best.
Some probability statistics about Hindenburg from Albertarocks
Major Crash - 27%
Selling panic of 10-15% at least - 39%
Sharp decline of 8-10% at least - 54%
Meaningful decline of 5-8% at least - 77%
Mild decline of 2-5% at least - 92%
Hindenburg Omen is an outright miss - 7.7% (one out of 13 times)