Even though the so-called Hindenburg Omen is, at best, an imperfect technical indicator and a work in progress in most analysts vie, its latest appearance has prompted the Omen’s creator, Jim Miekka, to exit the stock market.
“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,” he says.
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.
But that isn’t stopping Miekka from taking any chances, especially as September – typically the market’s worst-performing month is only one week away.
“It’s sort of like a funnel cloud,” he says.
“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.”
Despite the ominous forecast, there are some glimmers of hope.
Miekka doesn’t expect to sit on the sidelines for very long. In fact, Miekka, who is an avid target shooter despite being blind, is looking at put volumes and various moving averages that will offer clues of when he will start buying again.
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