From historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and usually takes place within the next forty days. The probability of a panic sellout was 41% and the probability of a major stock market crash was 24%. Though the Omen does not have a 100% success rate, every NYSE crash since 1985 has been preceded by a Hindenburg Omen. Of the previous 25 confirmed signals only two (8%) have failed to predict at least mild (2.0% to 4.9%) declines.
Because of the specific and seemingly random nature of the Hindenburg Omen criteria, the phenomenon may be simply a case of overfitting. That is, by backtesting through a large data set with many different variables, correlations can be found that don't really have predictive significance. The Omen is at best an imperfect technical indicator that is a work in progress.
 Recent occurrences
- August 20, 2010: There were 3,143 NYSE issues traded, with 83 New Highs and 95 New Lows. The McClellan Oscillator was negative.
- August 19, 2010: A first confirmation of Hindenburg Omen occurred (following the August 12, 2010 unconfirmed occurrence). That day 137 new highs and 69 new lows were recorded (2.2% of issues traded), and the new highs number was not more than double the new lows (although it was close). McClellan oscillator was negative at -83.6, and the 10 week moving average rose, which were the two remaining conditions. It should be noted that some market observers are saying that this cluster should not count as a valid signal because many of the issues hitting new lows are closed-end funds rather than ordinary stocks.
- August 12, 2010: An unconfirmed Hindenburg Omen occurred, the first since the market lows of 2009. One nearly occurred on August 11, but only 67 stocks hit new lows, less than 2.2% of issues traded.
Folks this is not the time to be invested in the stock market. I believe a crash to the 6500 level is possible. If you have discretionary cash that you would not like to lose, get out now. Please.
If you wanna take a chance- index puts and shorts is the place to be. But not long. Not long anything.
While the Hindenburg Omen is not precisely perfect, would you rather run with a 77% chance or risk your wealth on a 23% chance that nothing will happen in a market that cannot go up? You should know that in May 2007, I folded up my "long tent" and parked everything in bonds. We know how that turned out.