Stock Market Crash Imminent?

[hancocs]

Anybody know anything about "The Hindenburg Omen"? I have never heard of it.


The Hindenburg Omen Has Arrived -- Stock Market Crash Imminent?
Tyler Durden
Zero Hedge


Easily the most feared technical pattern in all of chartism (for the bullishly inclined) is the dreaded Hindenburg Omen. Those who know what it is, tend to have an atavistic reaction to its mere mention. Those who do not, can catch up on its implications courtesy of Wikipedia, but in a nutshell: "The Hindenburg Omen is a technical analysis that attempts to predict a forthcoming stock market crash. It is named after the Hindenburg disaster of May 6th 1937, during which the German zeppelin was destroyed in a sudden conflagration." Granted, the Hindenburg Omen is not a guarantee of a crash, and the five criteria that must be met for a Hindenburg trigger typically need to reoccur within 36 days for reconfirmation. Yet the statistics are startling: "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." The last Hindenburg Omen occurred during the lows of 2009. Today, we just had another (unconfirmed) Hindenburg Omen. It is time to batten down the hatches - something big is coming.

As a reminder, the 5 criteria of the Omen are as follows:

That the daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
That the smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
That the NYSE 10 Week moving average is rising.
That the McClellan Oscillator is negative on that same day.
That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs). This condition is absolutely mandatory.
Today, all five conditions were satisfied. June 2008 was another such reconfirmed event, and as Barron's pointed out then, "there's a 25% probability of a full-blown stock-market crash in the next 120 days. Caveat emptor." Boy was the emptor caveating within 120 days (especially if said emptor was named Dick Fuld). Which brings us to the present: should the Omen be reconfirmed within 36 days, all bets are off.

[opsec]

Do us a favor and follow up on this on or about September 23rd.

[offdalip]

believe none of that,


You can tell a statistician you want to see pink reindeer in the summertime in the everglades and he will find a way to render them

[Atash Hagmahani]

The stock market is somewhat bearish but probably "plunge protected". I don't know what it would take to overcome plunge-protection.

The problem with technical indicators--especially the more they are known to the public--is that they tend to self-fulfill and sometimes even self-cancel, eventually just turning into more random noise.

[hancocs]

http://www.bloomberg.com/news/2010-08-13/-hindenburg-omen-suggests-another-leg-down-in-stocks-technical-analysis.html

More on the Hindenburg Omen.

[MountainMeg]

The PPT, treasury and computer trading really do gum up any attempts to call the market.  I've asked hubby to keep his Thrift Savings Plan out of the market for the last 3 years because, as far as I see, it's rigged.  I've been a bit spooked since several economic cycle theories including Elliot Long Wave and Kondratiev wave are all pointing to a massive crash coming up.  But with the interfering going on, who can tell.   

[wander]

Tyler Durden says many many things. He's rarely right... but he knows his stuff. Remember that you cannot predict the future, and if you look into static hard enough you can see whatever you want.

[offdalip]

I've asked hubby to keep his Thrift Savings Plan out of the market for the last 3 years because, as far as I see, it's rigged.

you can still gain in a rigged market.

your goal is to make 10% a year.

wait till the market drops precipitously then put it all in once the indicators start to turn.

take it all out once you have gained 10% or so, no ifs ands or buts.

I did this in end of april and by june ^ > 10%

just do that once or twice a year, patience

[Beeherder]

It can take many weeks to execute changes in the type of retirement plans available to govt employees. The type of trading offdalip describes could be somewhat more risky given the time to execute in that TSP controlled world. Remember they don't actually let you touch that money until you are at least 59.5 years old. Then if you are retired you can begin to pull some of your contributions out and put them in self controlled plans. You can checkin but you can never leave, as the Eagles would say.

One of my colleagues tried to tell me he would be making more in retirement than as a full time employee because of the expected gains in his govt TSP stock market retirement plan. That was in the late 80s. I saw him last year and asked how his treasure chest was doing these days and he said he lost 50% of the value in his plan last year. Yikes! Guess maybe he won't be doing quite as well as he expected. And since the point of our original discussion was how wise he was to accept the new govt retirement plan requiring him to begin Social Security deposits and by that to depend on the SS as part of his retirement. He claimed the real benefit of the "new and improved" retirement plan was his ability to increase his tax sheltered deposits while those of us opting to stay in "the old plan" would be denied that special benefit. hmmmm ??

Your plan sounds ok as long as you don't bet more than you can afford to loose. Wall Street is a casino, you are gambling, as long as you realize that all is good. The game is rigged i prefer not to play.

[offdalip]

obviously that only works in an Interweb self directed government or state or employee pension plan.

will never work in a blind government pension plan that does not allow you to direct the funds into
specific investments. we had one of those last year which we cashed out specifically for that reason

[MountainMeg]

you can still gain in a rigged market.

your goal is to make 10% a year.

No go.  The TSP only offers, I believe, 3 to 5 types of accounts.  Changes are being made faster, but still have a long hang time. Plus hubby is the only one who can make the changes and he's not someone you want to give thing to that need to be done *now*.  Right now everything is hanging out in the "G Fund" (treasuries & govt bonds) keeping numerical value and losing purchasing power.  Oh yippee...

[Atash Hagmahani]

Oh, that is a common problem with all sorts of retirement plans. 

[Atash Hagmahani]

http://blogs.wsj.com/marketbeat/2010/08/23/yes-folks-hindenburg-omen-tripped-again/

The confirmation does not imply that a stock market crash is imminent...only that it is increasingly probable. The article says "25%", based on past experiences.

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.

[offdalip]

I like the part about bieng a blind target shooter.

that just HAS TO conjur up images of Obi Wan telling a blindfolded
Luke to "use the force" with his light saber practice

[Atash Hagmahani]

The Wall Street Journal says it's bunk and so does Jeremy Siegel, who says that the recession is over.

MAYBE THERE IS SOMETHING TO IT!

http://www.economicpolicyjournal.com/2010/08/wsj-disses-hindenburg.html