Posted on 08/23/2010 4:15:18 PM PDT by The Magical Mischief Tour
"The latest trigger of the Hidenburg Omen has prompted the Omen’s creator, Jim Miekka, to exit the market. 'I’m taking it seriously and I’m fully out of the market now,' Miekka, a blind mathematician, said in a telephone interview from his home in Surry, Maine. '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. The Omen has been behind every market crash since 1987,' ” reports WSJ. “ 'It’s sort of like a funnel cloud,' Miekka said. '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.' He added he’s not currently shorting anything, although he may look to short Nasdaq stock index futures in the next few weeks, 'depending on how the technicals go.' ”
Remember, as I reported on my analysis of the HO, the fact that it has empirically forecasted every crash since 1987 is not as important as the fundamentals behind the indicator. Many empirical supports work for long periods of time, then don't. Both Long Term Capital Management and subprime mortgages are examples of investments made purely on the basis of long term empirical support, before they crashed. What you have to do is look behind the numbers to see what they are telling you. HO measures cash flow versus stock momentum. When you have narrowing upward stock momentum on declining cash flow, the stock market is in trouble. That's what HO is flashing now.
The flashing HO coincides with very anemic money supply (M2) growth. Thus the flashing HO warning is not likely to be a warning of a minor downturn easily reversed, but a signal of a downturn that does not have huge money growth to stop the fall. This drop could be a big one.
There’s a blind CIA agent on a show called Covert Affairs. He’s got this strip with holes in it, and the proper Braille characters are raised to match information on screen. I don’t know how much of that is real.
DUM DE DUM DUM
DUM DE DUM DUM
DUM DE DUM DUM DUM!
I took this seriously when the 0bama administration admitted last week that the Economy was Lost.
Now we’re just waiting....
Some of us are poor enough that such warnings are of little consequence! LOL.
Today’s investment tip: Food, guns and ammo!
There may be a lot of behind-the-scenes defensive repositioning and rebalancing going on right now.
I already bought the big bag and lots of butter. I wanna watch Zero go to the bottom with the market.
Thanks for the ping!
Thanks for the ping...eyes wide open. (We’ll see)
Yield!
Geesh, I didn’t realize all the ramifications of that one word. Still, that’s the theme a’coming.
Interesting, thanks!
It's a zombie now, reanimated by voodoo fiat debt.
It can go feral and eat everyone's flesh at any moment.
LOL! Brilliant!
Ping
We “Better Call Saul”
America will be far better off when that soros creature heads off to hell where he belongs...
With or without this indicator, the market has been giving off signals and patterns that show that there has been a contest between the bull and bear positions since, oh, May in the market. The “flash crash” caught a lot of people, including pro’s, by surprise. Now an increasing number of people (including pro’s) do not trust the market, and there is little, if any, conviction for a major move in either direction at this point.
That’s where this indicator (the HO) comes in and shows that the limp volume, coupled with advancing indexes and deterioration under the indexes, is a sign to get out. Well, no duh. About 50% of the volume in the market is concentrated into about only 99 issues thanks to HFT, and with cap-weighted indexes, they’re gaming the indexes while the broader market is deteriorating.
Now we come to the seasonal issue: We’re coming out of August, a very lackluster summer market into the most notorious month of the year for the market, September. Still, we don’t need the “HO” indicator to get worried. People who have been around the markets long enough know that while the popular press likes to talk up the fantastic crashes that have occurred in Octobers past, it is September that can really maul your account in years where there is no fantastic crash.
HO or no HO, I’d be quite cautious going into September this year.
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