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What Is The Fuss About The Hindenburg Omen

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August 17, 2010 – Comments (3)

There has been a lot of commotion lately about what is termed the "Hindenburg Omen". I've seen main stream news shows, talk shows and a ton of blogs writing about it. In fact if you type in "Hindenburg" on Yahoo, the first 'auto-complete' suggestion is "Hindenburg Omen" and not the much more infamous "Hindenburg Disaster" for which it is named after. Heck, even my own mother called me earlier today to ask me what it all meant! So the phrase has definitely gained the attention of main-stream America.

I'm going to avoid getting into the theory itself, outside of a broad overview to briefly explain what it means, in case you don' t know yet. Beyond that, I plan on keeping it simply to my views and what we can expect from it going forward.

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3 Comments – Post Your Own

#1) On August 17, 2010 at 2:48 PM, leohaas (31.02) wrote:

Omen Schmomen. Just another attempt to predict where the market is going. This kinda thing has been tried again and again, to no avail.

Whoever really knows where the market is going would not share the information with anyone. They'd be very, very rich in no time...

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#2) On August 17, 2010 at 3:58 PM, TDRH (99.46) wrote:

Surprised our resident doom and gloomer did not come up with that phrase along with his numerology predictions.

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#3) On August 18, 2010 at 3:49 PM, passantgardant (< 20) wrote:

Pull up a DJIA chart from 1929-1932.

Here's one:  http://www.chartingstocks.net/wp-content/uploads/2009/02/1929.jpg

Notice the pattern from the Dec 1929 low to the 1930 high to the next leg down.  It's clearly a dead-cat-bounce/bull trap up to about a 50% retracement with a well-defined head-and-shoulders portending the next decline.

Now pull up a current DJIA chart.  Here's one: http://www.google.com/finance?client=ob&q=INDEXDJX:DJI

Notice the April 2010 approx. 50% retracement of the prior drop.  Notice the head-and-shoulders defined by January, April, and August 2010. There was a death cross in early June just off of the April highs indicating a new down trend.  All of this portends a next leg down, just like in 1930.  The completion of the head-and-shoulders already signaled its imminence.  The Hindenburg Omen is just one more confirmation of what was already signaled.

There will be another major leg down and a new low achieved, just like in 1930.  I expect this to occur before the end of September.  If you want to be prepared to buy at the bottom, get yourself some Dec/Jan ultra-short ETF calls now in order to generate the funds to do your buying spree later this fall.

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