Equity Thursday : Er, We Have 2 Hindenburgs. Thank You BABA US !
I told you Alibaba was up to no good.
I don’t know which fengshui master they used but now they have sucked up all the wealth from the rest of the market giving us a Hindenburg Omen on the date of their IPO, 18th Sept and a double one on the 19th.
To recap from my last Hindenburg alarm. https://tradehaven.net/market/fx/groundhog-day-the-jaws-of-death-hindenburg-again-may-2014-edition/
Hindenburg Omen (Bloomberg Definition)
The Hindenburg Omen is a combination of technical signals that together forecast the likelihood of a stock market crash. The technical inputs are the10 Week Simple Moving Average, New 52 week highs on the NYSE, New 52 Week lows on the NYSE, and the McClellan Oscillator.
If, on the same day, the 10 Week Moving Average is rising, New Highs are greater than 2.2% of total issues traded, New Lows are greater than 2.2% of total issues traded, and the McClellan Oscillator is negative, then a Hindenburg Signal is indicated by a yellow circle.
Two such signals within a 36-day period is considered a Hindenburg Omen and is indicated by a red diamond. The Hindenburg Omen portends a serious decline within the next 40 days.
The creator of the Hindenburg Omen, mathematician Jim Miekka, died tragically last month when he was struck by a car. http://blogs.wsj.com/moneybeat/2014/08/21/jim-miekka-creator-of-hindenburg-omen-dies-in-accident/
And exactly a month later, the Omen reared back to life along with a death cross the markets are talking about in the Russell 2000 Index forming a death cross pattern on Monday. http://money.cnn.com/2014/09/24/investing/stock-market-death-cross/
The Hindenburg uses the NYSE Composite, which has a base of about 2,800 listed companies, for their computation to reflect broad base market sentiments and the Russell 2000 has 1953 members.
Alibaba chose to list on the NYSE as an ADR.
No loss for those who did not manage to make their 30% returns because it is only a privilege for the rich and brave, referring to those bought in the run up after the IPO. A Reuters analysis has unveiled that majority of mega IPOs lag the market a year after their launch.
Do note that Julian Robertson thinks the world of Alibaba as well even as he calls for a bond market meltdown soon. http://read.bi/1qmSnx2
The signs are building up.
- It’s been 700 days since the Dow closed 10% below its previous high http://online.wsj.com/articles/dont-be-lulled-by-the-stock-markets-smooth-ride-1411140558
- Stock buybacks are slowing http://blogs.wsj.com/moneybeat/2014/09/23/buyback-binge-takes-a-breather-2/
- 47% of Nasdaq stocks are mired in bear markets down 20% from their peak in the last 12 months http://www.bloomberg.com/news/2014-09-14/record-s-p-500-masks-47-of-nasdaq-mired-in-bear-market.html
- Investors are completely ignoring geopolitical risks in their exuberance http://money.cnn.com/video/investing/2014/09/23/mohamed-el-erian-markets-are-exuberant-decoupled-from-fundamentals.cnnmoney/index.html?section=money_markets
- Emerging fraud scandals with Tesco, the world’s second largest retailer, the latest to admit fraudulent accounting http://www.zerohedge.com/news/2014-09-22/retailer-tesco-explains-how-companies-are-solidly-beating-expectations-one-sentence
- IMF, BIS and G-20 Finance Ministers coming out to say in the same fortnight that there is excessive risk building up in markets https://tradehaven.net/market/fx/the-forward-guidance-crystal-ball-excessive-risk-big-deal/
- Bond markets are hiding a huge gaping black hole in market liquidity that Blackstone is alarmed about http://www.zerohedge.com/news/2014-09-23/blackstone-slams-broken-bond-market-despite-record-bond-issuance-driven-stock-buybac
- And bond desks are shrinking as banks keep pushing supply into the streets and washing their hands clean thereafter http://www.bloomberg.com/news/2014-09-22/shrinking-bond-desks-taken-by-journeymen-as-masters-fade.html
- Income distribution is looking hideous and kids in America are not getting married because of income concerns
The tipping point is here – Alibaba creating a Hindenburg Omen on 18 Sept.
18 Sept + 40 days = 28 Nov
Major Bradley Turn Date 20 Nov
And the last one we pointed out in July actually led to a lousy new high in the EM markets before this round of corrections. https://tradehaven.net/market/markets-are-turning-today-bradley-turns-with-the-k-wave-sell-now-or-buy-vols/
This time I cannot help but think what a way to remember the passing of Jim Miekka by delivering the Hindenburg 7 years after the last big one back in Oct 2007.
Good luck !