Oh, the humanity! Hindenburg omen in stock market

[cory777]

Source: Reuters

CHICAGO (Reuters) – Sometimes technical indicators seem named just to see how much fear they can provoke.

Take the "Hindenburg Omen," an indicator that depends on a number of variables that was triggered on Thursday in the stock market, portending a sharp correction in coming months.

Named after the zeppelin disaster that took place over Lakehurst, New Jersey, in 1937, the pattern is a "rare but potent" sell signal, said Jay Shartsis, director of option trading at R.F. Lafferty & Co.

For this to be activated, it requires at least 2.2 percent of the market to reach new 52-week highs and 52-week lows on the New York Stock Exchange on the same day, which happened yesterday, suggesting a lack of conviction among investors.

Read more: http://news.yahoo.com/s/nm/20100813/ts_nm/us_hindenburg_stocks

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[DavidDvorkin]

1. There must also be an unusually large number of toads croaking in Estonia

Market "experts" so often sound like villagers from the Dark Ages.

[Warpy]

3. And they're always perpetually surprised when it doesn't behave that way

They're much better at casting around for bogus reasons after the fact than they are at predicting the future.

The market is due for a dump the way it happened in 2008, with commodities prices slipping first. The big institutional money will be long gone, tucked away into cash and t-bills, waiting for everything to crater so they can start inflating the next bubbles. This will be the pattern, the bubbles getting smaller as there is less and less money to bleed off the middle class, until there is no more money to be looted and even they think it's time for regulation and turning the economy around with demand side economics.

[divvy]

6. I'm not so sure

There could be another market correction, but I suspect it will be light and then on to a slow recovery.

I feel this way because much of the uncommitted money was scared out of the equity markets during the greatest stock crash since the 30's. Much of what remains today is long-term investment that has been re-allocated to reduce risk. A huge amount has already been frightened into fixed income. Much of what remains is not likely to be sold.

This is my guess, and I have the support of the moon, stars, and oxen entrails to back my view.

[Warpy]

8. I'll see your ox entrails and raise you deep cynicism

only because this has been the pattern before. Too much concentrated money is always looking for ways to bleed more money off what's left and creating artificial bubble markets is the best way to do it when legitimate investment in industry starts looking too risky.

Besides, everybody knows chicken guts are superior as predictors.

[Taverner]

9. I'm not so sure either - Index Stock Funds, particularly computerized ones

Follow a logic - and what may have been coded into them could be this very action.

If every Index Stock Fund sells at once....yikes!

[Safetykitten]

2. Don't believe that, but the market will tank this fall anyway.

[JDPriestly]

5. Most people won't notice. So many have already had to spend their

retirement savings just to live.

[krispos42]

4. Obligatory

:P

[Dr Morbius]

7. I don't know if anyone remembers, but 36 people died that day in New Jersey.

It was very lucky there weren't more. 97 people were on board. Does anyone remember that? Everyone remembers the line, "Oh, the humanity," but not too many remember the actual humanity. Am I crazy for thinking these stock market experts don't care?