Led Zeppelin

Led Zeppelin

The Hindenburg Omen: Will the Stock Market Tank like a Lead Zeppelin?

 

 

Friday, August 20 marked an ominous occasion for concerned Wall Street watch-dogs.

 

Late that afternoon alarmed the second appearance of the prophetic Hindenburg Omen. The first signal triggered on August 12, suggesting a market decline of 5% or more within the next 40 days. The second signal on Aug. 20 served as a confirmation to the first, generating speculation about the economy's current fragile, "unusually uncertain" state.

The Omen was named after the 1937 disaster of the German zeppelin Hindenburg bursting into flames and crashing, killing 35 passengers. Its name accurately reflects the "doom and gloom" mindset the series of indicators technically forecasts. The Hindenburg Omen has accurately predicted every stock market crash since 1987. However, its record hasn't been flawless. The Omen has been triggered several times before without a major market downturn following. According to the Journal, "Market analysts said only about 25% of Omen appearances have led to stock-market declines that can be considered crashes."

Jim Meikka, the mind behind the Hindenburg Omen, is a full supporter of his technical tool - having already sold out of the market. Blinded by an accident in 1986, the former physics instructor developed the financial instrument to better anticipate stock market crashes. Formalized in 1995, the Hindenburg Omen monitors economic health to predict a substantial downturn trend in the market by analyzing a series of 52-week highs and lows, incorporating a slew of technical factors including a negative McClellan Oscillator.

Hindenburg Omen Criteria:

1. 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% of total NYSE issues traded that day.

2. That the smaller of these numbers is greater than or equal to 69 or 2.2% of the total issues.

3. That the NYSE 10 Week moving average is rising.

4. That the McClellan Oscillator is negative on that same day.

5. That the new 52 Week Highs cannot be more than twice the new 52 Week Lows (However, it is fine for the new 52 Week Lows to be more than double the 52 Week Highs). This condition is absolutely mandatory.

If all requirements are met, the indicator must then trigger a second confirmation signal within 36 days. Last Friday, that second signal was activated.

The Results: 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 40 days. Supplementally, the probability of a greater than 5% move to the downside exceeds 70% within the next 120 days, the odds of a panic selloff is about 40%, and the odds of a market crash is approximately 20%. Meikka speculates the downturn will occur sometime in September. 

"It's sort of like a funnel cloud," he explained. "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."

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Erik Long, Quant Trade's founder, highlighted the significance of such stock-signs in turbulent times: 

"The Hindenburg Omen is one more indication of impending market destabilization. Both fundamental and quantitative data suggests that the equities markets will suffer from a major downturn. Quant Trade has been following the situation closely, and we're devising hedging strategies to protect our clients in a future market collapse. More information will be released as it becomes available." 

For all economic updates, visit: http://www.FractalFinance.com

*Content is provided without any warranty, express or implied by Access Media Management. While all information is believed to be reliable, it is not guaranteed to be accurate.

 

About the Author

Terris Anne Packer is the founder of Access Media Management and IMC Financial Services Specialist for eFloorTrade in Orlando, FL & Quant Trade Technologies in Chicago, IL.

What kind of Led Zeppelin tattoo should I get?

I LOVE Led Zeppelin more than any band in the world. When I am older, I want to get a tattoo expressing my love for them. Something small, but I don't know what kind of tattoo I want. What kind of Led tattoo should I get?

zoso? whichever member is your favourite and their symbol perhaps.

Led Zeppelin - Whole Lotta Love (1997 Promo)