By: GZ on Giovedì 25 Ottobre 2007 03:26
il ^Titanic Syndrome signal è scattato#http://www.safehaven.com/article-8675.htm^ due giorni fa
...Our Los Angeles colleague, Bill Ohama, devised the Titanic Syndrome signal a few decades back and as we noted in our update on July 18th of this year, Dennis Myers updated the rules for this indicator to account for the far greater number of issues being traded today than were traded when the indicator was first devised. Let's give you the rules for the Titanic Syndrome that we originally included in our July 18th update:
The Dow must first make a new 52 week high.
Within 7 days before or after the 52 week high new lows must exceed new highs.
After the 52 week high, for any 2 consecutive days, there must be a greater than 2-1-advance/decline day, and one of those days must have declining issues greater than or equal to 5 times advancing issues.
After the 52 week high in any 3 days out of a 4 day period declining issues must be greater than or equal to 1.75 times advancing issues in each of the 3 days.
After the 52 week high declining volume must be greater than 9 times advancing volume.
The first two rules have been satisfied and, as noted above, the fourth rule is close to being satisfied already. Only one of the last three rules has to be satisfied to complete the signal. With that knowledge, you can follow the indicator along with us.
We were somewhat surprised today after entering the recent data into a spreadsheet to find that the market has not deviated significantly as yet from the very negative pattern in evidence for the past 11 decades during October and early November of years ending in 7. In fact, today's price relative to the October 3rd close is below the results of three of the prior 11 decades traced in our most recent newsletter on the page 3 chart.
As to the overall decennial pattern chart for years ending in the digit 7, if the Dow were at its average price today based on the closing price on the last market day in the year 2006, it would be at the 12,296 level. That is not necessarily a prediction but it could give us an idea of the downside potential over the next month or so if the market decided to pursue the prior patterns of years ending in the digit 7.
On Friday Peter confirmed that the last condition was met for a Titanic signal, here's what he writes:
Well! Now it's beginning to look a lot more like October of a year ending in the digit 7.
Let's begin with a technical indicator we mentioned on October 16th, namely the Titanic Syndrome, invented by Bill Ohama. At that time, we noted that the first two requirements for generating a signal had been met and all that was required to complete the signal was one of the remaining three conditions. We were close to seeing condition #3 met over the past 2-3 days, but the market did not generate three out of four days with a negative advance/decline ratio greater than 1.75 to one. Today, however, saw a day in which declining volume swamped advancing volume by a ratio of 27.7-1. The requirement for condition #5 is a negative ratio greater than 9-1 so today easily qualified and the signal has now been completed. Dennis Meyers wrote an article for Stocks And Commodities magazine in 1995 and updated the original Ohama parameters to the ones given in our October 16th update. In that article, Meyers examined the signals given over the preceding 17 years and it turns out, by our calculations from his article, that the average decline from the closing price on the Dow on the day of the confirmed signal to the following low closing price was 7.9%. There were obviously noticeable variations in the results and we have not followed through with the results over the past 12-13 years.
We now have seen both a confirmed Hindenburg Omen signal and a confirmed Titanic Syndrome signal so it would be fair to say ^hat the market is in a weakened technical condition#http://www.safehaven.com/article-8675.htm^