'Hindenburg Omen' Sees Stock Market Crash

Skeptics say it's just alarmist thinking (or drinking)
By John Johnson,  Newser Staff
Posted Aug 14, 2010 1:27 PM CDT
In this Aug. 8, 1936, file photo, the zeppelin Hindenburg floats past the Empire State Building in New York.   (AP Photo)
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(Newser) – Uh-oh. The Hindenburg Omen—a technical indicator that crunches Wall Street numbers—thinks the stock market is headed for some kind of meltdown next month, reports the Wall Street Journal. But take it with a grain of salt. The Journal tempers the doom with quote up high from an industry observer: "Personally, it sounds like (people) are starting their weekend drinking early."

The Hindenburg Omen has been around since 1995, one of several such indicators with names like "The Bearish Abandoned Baby" that tend to draw attention in dire times. Market experts say that about 1 in every 4 appearances of the Omen leads to what can genuinely be considered a crash. "It isn't a reason to move to 100% in cash," says a strategist at Schaeffer's Investment Research. "We're taking a wait-and-see approach, but considering its recent history, we're considering it more than other indicators." (Read more stock market crash stories.)

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