Saturday, August 14, 2010
The Hindenburg Omen Indicates Stock Market Crash is Coming
Activist Post
On Thursday August 12, the US equities market triggered a confirmed technical indicator known as the “Hindenburg Omen." This omen, as you may have guessed, suggests that a stock market crash is on the way. However, it doesn’t mean just any crash -- according to Albert Edwards, a London-based strategist at Societe Generale SA, the indicator means “a savage equity downturn is imminent."
The level of attention and significance given to this omen is truly unparalleled in the world of technical analysis, and for good reason.
Every NYSE crash since 1985 has been preceded by a Hindenburg Omen.
Based on historical stats, the probability of a panic sellout is 41%, while the probability of a major stock market crash is 24%.
Out of the previous 25 confirmed signals, only 8% (two) have failed to predict at least a mild decline in equities markets.
The probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen is 77%, and usually takes place within the next 40 days.
As a result, the Hindenburg Omen is indeed the most feared indicator for Wall Street bulls. However, when the infamous omen starts showing itself two times in two days, that’s when things can get really scary.
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