The Wall Streeters are buzzing about a possible mathematical sign of economic apocalypse. Called the Hindenburg Omen, it's a formula that measures the probability of a stock market crash (defined as a 15 percent or greater decline). Hindenburg Omens have reportedly predicted every crash since 1985—though of course, the old correlation v. causation problem means that a Hindenburg Omen occurring doesn't necessarily mean a crash is on the way. The five criteria for a full-fledged omen—called a "confirmed" Hindenburg Omen—are as follows:
[T]he daily number of NYSE New 52 Week Highs and the Daily number of New 52 Week Lows must both be so high as to have the lesser of the two be greater than 2.2 percent of total NYSE issues traded that day...The traditional definition had two more filters: That the NYSE 10 Week Moving Average is also Rising, which we consider met if it is higher than ...
