So I would ask, how many false positives are there from this algorithm Omen: from how many of the 160 separate days on which signal is observed between 1985 and 2006 are there "true" stock market crash or panic events?
Five? Ten? 80? 160?
Assuming, at best, 80 stock market crashes between 1985 and 2006, that's a 50% false positive rate: the reliability of that signal Omen is no better than flipping a coin and hoping baby gets a new pair of shoes.
Looking back at 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.
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