For weeks now the phrase, “Hindenburg Omen,” has been thrown around by the media, the web, and stock analysts alike. The oman basically is sparked when several market conditions meet up, and in many cases it ends in a stock market crash. In order for the Hindenburg Omen to be reached, all of the following must occur:

* 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% of NYSE issues trading that day.
* The NYSE’s 10-day moving average is rising, or the index has moved higher during the past 50 trading days.
* The McClellan Oscillator is negative on the same day. This is the the difference between the advancing and declining equities on the NYSE.
* New 52-week highs cannot be more than twice the new 52- week lows (though new 52-week lows may be more than double new highs).

The criteria above for the omen has actually been met twice, once on August 12th, and another time last Friday the 20th. Despite this, all the doom and gloom of yet another stock market crash may be unwarranted. Even though the Hindenburg Omen has predicted every stock crash since 1987, it also has a ton of false positives. Only about 25% of the time does it actually foretell a crash. Some analysts even argue that the Omen actually was not triggered, because most of the NYSE new highs were not on common stocks, rather preferred stocks and other forms of fixed income products.

Either way, it’s really not an intelligent move to buy and sell stocks based on age old omens.