The big fear among traders yesterday, Friday the 13th on your Gregorian calendar, wasn’t Jason Voorhees, it was the “Hindenburg Omen.” Steve and Tomi Kilgore penned a piece for today’s Journal that discusses the omen, the mathematician who created it, and what it might, or might not, mean for the stock market.
It’s a good read, although judging by some of the comments on the story on WSJ.com, some people are taking it a bit too seriously. But go read the whole thing yourself (subscription required, it’s behind the paywall.) At the least, you’ll get a sense of what’s preoccupying the market these days. It ain’t those “stellar” second-quarter earnings.
Forget about Friday the 13th. Many on Wall Street took to whispering about an even scarier phenomenon—the “Hindenburg Omen.”
The Omen, named after the famous German airship in 1937 that crashed in Lakehurst, N.J., is a technical indicator that foreshadows not just a bear market but a stock-market crash. Its creator, a blind mathematician named Jim Miekka, said his indicator is now predicting a market meltdown in September.
Wall Street has been abuzz about whether the Hindenburg Omen will come to bear, with some traders cautioning clients about the indicator and blogs pondering all the doom and gloom.
The tidbit I love is that a partner of Miekka’s coined the name – because “Titanic” was already taken. I have to admit, I hadn’t heard of the “Titanic Syndome” before, but here’s a post at Safehaven dated Oct. 22, 2007, that discusses both it and the Hindenburg Omen.
The all-time high for both the DJIA and S&P 500 was recorded on Oct. 9, 2007, incidentally. A few of the comments on WSJ.com asked how the Omen did during that time frame. Pretty good, right?
Now, even Steve’s article makes it clear the Omen isn’t a lock predictor; nothing is. All of these kinds of things are just people trying to uncover patterns that could point to one possible direction stocks might travel in the future. But it is a red flag. Plug it into your thinking, along with everything else you’re seeing out there, and make your own decisions.
(Photo: Wikimedia Commons)