Hindenburg Omen
August 16th, 2010WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Many people are submitting the Hindenburg Omen thing, so this is mostly to let you know: Yes, I’ve seen that information.
As for what I think about it: I’d refer to what I wrote about the recent Cisco caper, which applies to holding stocks in general:
You should be extremely concerned if you have more than pocket lint riding on stock market. This isn’t a functional market, where buyers and sellers are efficiently determining prices by their activities. This is machines juggling chainsaws.
As for the signal itself, it was roughly right in 2007. You would have had to take a pants shitting drawdown before it went your way, though. This line from the Wall Street Journal should be kept in mind, “The Omen was present at every market crash since 1987, but has also occurred many other times without an ensuing significant downturn. Market analysts said only about 25% of Omen appearances have led to stock-market declines that can be considered crashes.”
My guess is that the INDU high of 11,258 on the April 30 weekly candle represents a pretty strong overhead resistance. (There’s multiple overlapping woowoo there.) If they can crank it back up to around that level, it would make for a delicious shorting opportunity. I might try some deep out of the money puts on DIA if they squeeze it back up around there. As for chasing short, based on mainstream news stories… *shaking head* Retail investors bring the money, the squid brings the matches.