Titanic Syndrome

By: Ed Carlson | Tue, Jun 4, 2013
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The media was all abuzz on Friday with news of another sighting of the dreaded Hindenburg Omen. As there was no shortage of stories describing the "omen" I decided to use this space to mention another indicator with a name which is just as scary: the Titanic Syndrome.

On Thursday (one day before the Hindenburg sighting and Friday's 200 point drop in the Dow!) the Titanic Syndrome appeared. This phenomenon was discovered by Bill Ohama in 1965. Ohama wrote that the syndrome is typically followed by a 10% drop in the Dow.

The Titanic Syndrome is much easier to understand and to watch for than the Hindenburg Omen. The Titanic Syndrome is triggered when NYSE 52-week lows out-number 52-week highs within 7 days of an all-time high in equities (or a 400 point rally in the Dow Industrials index).

The chart below shows "highs minus lows" below zero last Thursday and on 4/17/13. The previous syndrome (and omen) both occurred in April with no effect felt in the market. At that time, however, the Nikkei had not lost 15% of its value during the previous week. Take a look at how closely correlated the Nikkei and Dow indexes have been during the last several years before deciding whether or not to take heed of last week's warnings!

highs minus lows chart

 


Request a free copy of Bill Ohama's article explaining the Titanic Syndrome at Seattle Technical Advisors.com

There will be an encore performance of last week's free webinar, Mapping the market with Lindsay, this Wednesday at 3:30 Pacific/ 6:30pm Eastern. Request log-in details at Seattle Technical Advisors.com

 


 

Ed Carlson

Author: Ed Carlson

Ed Carlson
Seattle Technical Advisors.com

Ed Carlson

Ed Carlson, author of George Lindsay and the Art of Technical Analysis, and his new book, George Lindsay's An Aid to Timing is an independent trader, consultant, and Chartered Market Technician (CMT) based in Seattle. Carlson manages the website Seattle Technical Advisors.com, where he publishes daily and weekly commentary. He spent twenty years as a stockbroker and holds an M.B.A. from Wichita State University.

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