In the past few days we've had some interesting (and scary!) news, which has sent a lot of investors scrambling and heading for the hills. The Hindenburg Omen has been tripped!
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.
So a lot of people are getting wary, and getting out of the market because they believe that the omen is correct and the possibility of another market crash is pretty high. In fact some are saying that the market could continue on a downward spiral til it reaches 5000! Sorry to be the bearer of bad news!
What are your thoughts?
I wonder how much things like the Hindenburg Omen actually contribute to these crashes!