Hindenburg Omen - Possible Weaknesses

Possible Weaknesses

Structural: New highs and lows are being affected by ETFs. The last two times Hindenburg triggered was due to Bond ETFs making new highs or lows. If ETFs were removed, Hindenburg would not have triggered. When the Omen was originally designed there were no ETFs, so triggering behaviour in the 2010s is not the same as in the 1990s to mid-2000s.

Theoretical: It is theoretically possible for those with unlimited financial resources and minimally regulated automated trading systems to keep the omen from triggering. This has been postulated by the creator of the "Vergulde Draeck" Omen.

Triggering: To eliminate false positives some technical analysts have imposed the condition that the Hindenburg Omen

• must be triggered three times in a row within a month from the first triggering event for said initial trigger signal to be considered to be valid (i.e. requires double confirmation)
• is only valid when "all tightly coupled triggerings are within a fortnight"
• will indicate a possible future downturn or correction, depending on the magnitude of any "one off" triggering