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SENTRY JOURNAL » Barack Obama, economy, Stock Market Crash, The Hindenburg Omen » The Hindenburg Omen

The Hindenburg Omen

I found this very interesting article about an economic tool called the Hindenburg Omen.  It is a tool that has been used in the past to predict the future of the stock market.  By the looks of it we could possibly be facing some severe economic crisis in the next 120 days.  The below article is from the Wall Street Journal.

Yes Folks, Hindenburg Omen Tripped Again 

By Steven Russolillo

The Hindenburg Omen reared its ugly head late last week, signaling more doom and gloom as stocks plod along amid the dog days of summer.

The Omen, a technical indicator which uses a plethora of data to foreshadow a stock-market crash, was tripped again on Friday, marking the second time since Aug. 12 it has occurred. (It also came close on Thursday, but one of its criteria fell short.)

The latest trigger has prompted the Omen’s creator, Jim Miekka, to exit the market. “I’m taking it seriously and I’m fully out of the market now,” Miekka, a blind mathematician, said in a telephone interview from his home in Surry, Maine. “I would’ve probably stayed in until the beginning of September,” depending on how the indicators varied. “That was my basic plan, until the Hindenburg came along.”

The Omen has been behind every market crash since 1987, but significant stock-market declines have followed only 25% of the time. So there’s a high likelihood that the Omen could be nothing more than a false signal.

But that isn’t stopping Miekka from taking any chances, especially as September, typically the market’s worst-performing month, sits only one week away.

“It’s sort of like a funnel cloud,” he said. “It doesn’t mean it’s going to crash, but it’s a high probability. You don’t get a tornado without a funnel cloud.” He added he’s not currently shorting anything, although he may look to short Nasdaq stock index futures in the next few weeks, “depending on how the technicals go.”

Despite the ominous forecast, there are some glimmers of hope. Miekka doesn’t expect to sit on the sidelines for very long. In fact, Miekka, who is an avid target shooter despite being blind, is looking at put volumes and various moving averages that will offer clues of when he will start buying again.

“With what we have now, I think it’s possible we could get a 20% decline going into the fall,” Miekka said. “But I would expect some type of selloff and be buying at a lower price.”

You can read the entire article here.

Additionally you can read a great article on this topic here.

If we continue down our current path we could be in for a rocky economic ride in the near future.  It’s time for the President’s economic team to start thinking outside of the box or start looking for new jobs. 

If you don’t think this is serious, just look at what the heavy hitters in the stock market are doing.  Leftist George Soros is hunkering down as his optimism in the US stock market sinks. He has slashed the amount of money he is willing to gamble on the fortunes of the US stock market in the second quarter as market volatility increased. 

This is scary stuff folks.  Maybe we should start paying attention to the warning signs and prepare for the worst.  It couldn’t hurt.

Liberty forever, freedom for all!

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Filed under: Barack Obama, economy, Stock Market Crash, The Hindenburg Omen

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Comments
  • Trestin August 26, 2010 at 9:21 AM

    This seems to support what the Trends Research Center has been saying for a few months.

  • John Carey August 26, 2010 at 5:57 PM

    It does indeed Trestin. I know the Prez called his economic team together the other day. I wonder if he is getting his folks ready for the correction and the spin they will use to tell us that this was all the Republicans fault.

  • Teresa August 26, 2010 at 10:01 PM

    Its better to be safe than sorry, John. We should prepare for the worst, especially with this economic killer of a President we have in office now. Thanks for posting this most important and interesting article, John.

  • John Carey August 26, 2010 at 10:11 PM

    I found this yesterday on the drudge Teresa and then it was buried. Hmmmm I wonder why?

  • Matt August 26, 2010 at 10:12 PM

    We're going like gangbusters to become debt free. I don't want a ton of red ink when this train wrecks.

  • John Carey August 26, 2010 at 10:16 PM

    I hear you Matt. I'm working on it too. I don't think I'll have enough time though.

  • Ryan August 29, 2010 at 1:46 PM

    The Hindenburg Omen is supposed to happen three times in one month to be considered "triggered". What is frustrating is the WSJ article doesn't cover why the omen was not triggered when it says it "came close on Thursday". In fact there are many who believe it was triggered on that Thursday. Also on the 27th Bernanke said the Fed is prepared but reluctant to use unorthodox measures such as buying more long-term securities and even supplying dates on when interest rates might be raised.

    After his speech equities closed higher, but really why? It is definitely time to hedge against the market.