Warning! Warning! Hindenburg Stock Market Crash Omen Confirmed !
- I do not use purely technical indicators. But I have always found them very useful. Being mathematically and statistically inclined, I am always on the lookout for strange statistical anomalies. The Hindenburg technical omen is one hell of an indicator to shrug off. See also earlier post: Ginormous Economic, Financial And Monetary Tsunami Coming! Martial Law?! 24 Experts Warn of 2010 Meltdown! Armageddon 2010!
- The snakes are preparing for a major economic event. This will be a worldwide collapse followed by world war. They can scheme all they like but they are not God. Take their threats seriously but know that they may not get to have things all their way. Here are some indications on what they have planned:
The financial collapse and economic depression will happen by the end of this coming September, maybe a little sooner. After that, the war with Iran. Please understand, both the western governments and the government of Iran want this war. So do the born agains. Once you beat the drum and wave a flag the sheeple come scurrying to their shepherds. Like blowflies, people love birthday parties and battlefields. Old Henry and his people have been working hard behind the scenes. And we will make sure that the sheeple get what they want – good and hard.
When the economic turmoil hits will the sheeple still doubt? Just so you know, there will be a cover story about a virulent computer virus which will necessitate the banks of the world closing (for about three days?). When these re-open it will be back to the 1930s where depositors must prove why they need their money. The more things change, the more things stay the same. Just remember I told you so.
The economic collapse will be this year – 2010! I’m still awaiting word as to whether it will be sooner or later. When it happens we’re talking days, not weeks. Kazuhiko-san .. has contacts who have advised that the Japanese economy is doomed – bet you didn’t hear that on your free, independent media. When I last spoke to Nicholson he told me that the Bank of England has huge investments in the banking systems of Portugal, Italy, Greece and Spain. You work it out. We have our global currency ready. We’re about to move. It’ll be micro-chipped just like New Zealand drivers’ licenses. … And after the culling, you will lick the hand which feeds you.
One world government is actually closer than even you suspect. The sheeple won’t notice much difference. The Alpha Lodge will continue to pull the strings until the coming of Vindex. ….The recent report of the ‘stress test’ of European banks paints a rosy picture, so I guess that there’s no need to worry. I guess that there’ll be no global economic depression after all. I suppose that the economies of Portugal, Italy, Ireland, Greece and Spain are healthier than I predicted. But when the banks close and the international economy dies before your readers’ eyes, they will know that I provided the truth …. When their governments take off their velvet gloves and smash with their iron fists understand that the Usher is near, preparing the way for Vindex.
- Svali, the Ex. German Illuminati who turned to Christ, have similarly confirmed a few years ago, the Illuminati plan of a Great Economic Depression followed by war.
…I was told it would make the Great Depression look like Sunday school. And at that time, it’s going to… they’re going to really be manipulating finances to bring about chaos, confusion, warfare, and then…’
‘The Illuminati has planned first for a financial collapse that will make the great depression look like a picnic. This will occur through the maneuvering of the great banks and financial institutions of the world, through stock manipulation, and interest rate changes. Most people will be indebted to the federal government through bank and credit card debt, etc. The governments will recall all debts immediately, but most people will be unable to pay and will be bankrupted. This will cause generalized financial panic which will occur simultaneously worldwide, as the Illuminists firmly believe in controlling people through finances.
Next there will be a military takeover, region by region, as the government declares a state of emergency and martial law. People will have panicked, there will be an anarchical state in most localities, and the government will justify its move as being necessary to control panicked citizens. The cult trained military leaders and people under their direction will use arms as well as crowd control techniques to implement this new state of affairs. ….The Illuminists expect this and will be (and are BEING) trained in how to deal with this eventuality. They are training their people in hand-to- hand combat, crowd control, and, if necessary, will kill to control crowds. The Illuminati is training their people to be prepared for every possible reaction to the takeover.’
- The probability is very high for a market crash. I am still pretty much divided as to whether the market will rally very much higher (due to massive QE) after this crash event or whether it will follow the 1929-1933 route, ie down down down. There is every indication that the USD will be debased. Will investors flee to stock (as hard assets) or will they abandon both stock and treasuries and flee only to commodities and precious metals. One thing for sure gold is headed alot higher!
Hindenburg Stock Market Crash Omen Confirmed
So what is a Hindenburg Omen? It is the alignment of several technical factors that measure the underlying condition of the stock market — specifically the NYSE — such that the probability that a stock market crash occurs is higher than normal, and the probability of a severe decline is quite high. This Omen has appeared before all of the stock market crashes, or panic events, of the past 25 years. All of them. No panic sell-off (greater than 15 percent) occurred over the past 25 years without the presence of a Hindenburg Omen. Another way of looking at it is, without a confirmed Hindenburg Omen, we are pretty safe. But we have an official Hindenburg Omen as of August 20th, 2010.
We got a second official confirmed Hindenburg Omen observation Friday, August 20th, 2010 after getting a first observation Thursday, August 12th, 2010, meaning we are now on the clock watching for a stock market crash. There is a much higher than normal probability of a stock market crash starting sometime over the next four months. All criteria were met Friday. August 20th’s observation saw 83 NYSE New 52 Week Highs, and 95 NYSE New 52 Week Lows according to the Wall Street Journal, the lower of the two coming in at 2.64 percent, above the 2.2 percent threshold required for a Hindenburg Omen observation. Total NYSE issues traded were 3,143. New Highs were not more than twice New Lows, the McClellan Oscillator was negative at negative -106.46, and the 10 Week Moving Average is rising. This second observation on August 20th has occurred within the required 36 day period necessary for a cluster (two or more observations) to occur.
The details for the August 12th, 2010 first observation are as follows: Both NYSE New 52 Week Highs (92) and New 52 Week Lows (81) exceeded 2.2 percent of NYSE traded issues (3,168). The McClellan Oscillator was negative -120.03, and the 50 Day Moving Average was Rising. New 52 Week Highs were not more than twice New 52 Week Lows. Now that we have a second observation, we have an official confirmed Hindenburg Omen. This is the first Hindenburg Omen since 2008, which of course led to the massive stock market crash in the autumn 2008, and the third since the Bear Market started in 2007 (we got one in 2007, one in 2008 and maybe we will get one here in 2010). We got crashes after both the October 2007 and June 2008 Hindenburg Omens.
We did get a “rounded” third Hindenburg Omen observation Thursday, August 19th, 2010, where the lower of New Highs and Lows came in at 2.18 percent, which is just shy of the required 2.2 percent level, but rounds up to 2.20. Rather than include this as an observation with an asterisk, we are just counting the two from August 12th andAugust 20th to avoid controversy. The point is, we have an official confirmed Hindenburg Omen with at least two observations at this time, and no asterisk.
The way Peter Eliades put it in his Daily Update, September 21, 2005 (www.stockcycles.com), “The rationale behind the indicator is that, under normal conditions, either a substantial number of stocks establish new annual highs or a large number set new lows — but not both.” When both new highs and new lows are large, “it indicates the market is undergoing a period of extreme divergence — many stocks establishing new highs and many setting new lows as well. Such divergence is not usually conducive to future rising prices. A healthy market requires some semblance of internal uniformity, and it doesn’t matter what direction that uniformity takes. Many new highs and very few lows is obviously bullish, but so is a great many new lows accompanied by few or no new highs. This is the condition that leads to important market bottoms.”
So to recap, we have an unconfirmed Hindenburg Omen if the first four conditions are met, but the fifth is not — in other words we only have one signal within a 36 day period. Once a second or more Omen occurs, we then have a confirmed Hindenburg Omen signal with substantially higher odds that a subsequent stock market plunge is coming.
Our research noted that plunges can occur as soon as the next day, or as far into the future as four months. In either case, the warning is useful. It just means, if you want to play the short side after a confirmed signal, or move out of harms way, you must be prepared to see it happen as soon as the next day, or four months from now, possibly after you forgot about it. About half occurred within 41 days.
Based upon the five parameters noted above, here’s what we found: Confirmed Hindenburg Omens are very rare. There have been only 27 confirmed Hindenburg Omen signals over the past 25 years. June 16th, 2008′s was the 27th. This is amazing when you consider that during that time span, there were roughly 6,300 trading days. Of those 6,300 trading days where it was possible to generate a confirmed official Hindenburg Omen, only 191 (3.0 percent) generated one, clustering into 27 confirmed potential stock market crash signals.
If we define a crash as a 15% decline, of the previous 27 confirmed Hindenburg Omen signals, eight (29.7 percent) were followed by financial system threatening, life-as-we-know-it threatening stock market crashes. Three (11.1 percent) more were followed by stock market selling panics (10% to 14.9% declines). Four more (14.8 percent) resulted in sharp declines (8% to 9.9% drops). Six (22.2 percent) were followed by meaningful declines (5% to 7.9%), four (14.8 percent) saw mild declines (2.0% to 4.9%), and two (7.4 percent) were failures, with subsequent declines of 2.0% or less. Put another way, there is a 30 percent probability that a stock market crash — the big one — will occur after we get a confirmed (more than one in a cluster) Hindenburg Omen. There is a 40.8 percent probability that at least a panic sell-off will occur. There is a 55.6 percent probability that a sharp decline greater than 8.0 % will occur, and there is a 77.8 percent probability that a stock market decline of at least 5 percent will occur. Only one out of roughly 13 times will this signal fail.
All the biggies over the past 25 years were preceded and identified by this signal (as defined with our five conditions). It was on the clock just before the stock market crash of the autumn of 2008. It was present and accounted for a few weeks before the stock market crash of 1987, was there three trading days before the mini crash panic of October 1989, showed up at the start of the 1990 recession, warned about trouble a few weeks prior to the L.T.C.M and Asian crises of 1998, announced that all was not right with the world after Y2K, telling us early 2000 was going to see a precipitous decline. The Hindenburg Omen gave us a three month heads-up on 9/11 (2001), and told us we would see panic selling into an October 2002 low, warned in October 2007 that a multi-month 16 percent plunge was about to start, from the DJIA’s all-time high. And it was on the clock three months before the stock market crash of the autumn 2008 into spring 2009 that wiped out 47.3 percent of the stock market’s value.
What does it mean for traders and investors when we get a confirmed Hindenburg Omen? This is really important to understand. A confirmed Hindenburg Omen is not a guarantee of a stock market crash. The odds of a crash based upon the history since 1985 is 29.7 percent. That means the odds we will not have a crash are quite high, at 70.3 percent. However, since a stock market crash is akin to economic death in many circles, you can look at the situation like this. If you were hearing from your doctor that the surgury you are contemplating stands a 30 percent chance of you dying, that becomes a very high percentage probability – one you likely do not want to take if the surgury is not absolutely necessary. A 30 percent probability of a stock market crash is extremely high when you consider that there have been only eight over the past twenty-five years, and the normal odds of a crash happening randomly are only about one-tenth of one percent. You now also have to factor that the Fed is pumping liquidity to prevent crashes once these signals occur. So you do not want to go short the farm. You may want to think about taking prudent precautionary action according to your investment advisor given the much higher than normal odds of a crash. That may not mean shorting. It may mean increasing cash positions or hitting the sidelines for a while. Or it may mean a carefully constructed shorting strategy developed with your advisor that limits losses, and invests only the amount which you can afford to lose. Still, it is interesting that even with the heavy liquidity the Fed has been pumping around the time of the past two signals, the odds of a 5 percent decline or more remain pretty high at 77.8 percent.
We do not think it is wise to listen to folks who minimize the risk in markets pointed out by the Hindenburg Omen. We disagree with the argument that since so many of the listings on the NYSE, especially those of the New High “stock” group recorded for the Omen, are some type of Fixed Income product (ETFs, preferred stocks, etc) that the Omen isn’t really capturing “stocks” when it says “we got x % New Stock Highs,” therefore the Omen is irrelevant. Our position is that the argument that the “stock market Omen” isn’t measuring the internals of the “stock” market is false. Here is why: A huge percent of NYSE stocks are financials, banking firms, and include firms such as General Electric which is essentially a financial firm, although many people would not think of them that way. Financial firms hold substantial positions in bonds. Almost every bank listed on the NYSE carries a fixed income bond portfolio somewhere between 15 and 30 percent of their entire balance sheet, and have for years, going back far beyond the past 25 years of our research, a period of time when the Hindenburg Omen worked just fine, thank you very much. Bond and other fixed income products are prevalent throughout the distribution of companies listed NYSE, and have been for years. This Omen has worked for at least the past 25 years. It accurately called the stock market crashes of 2007 and 2008 when the NYSE included many stocks holding significant positions in fixed income instruments. It does not matter. Our entire economy has essentially moved from a manufacturing base to a financial base. This makes the Hindenburg Omen relevant. We believe it would be unwise to ignore this potential stock market crash warning.
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