I am running behind this morning, but life is just that way sometimes. I had to get my boy to school because he missed the bus, and then some folks showed up to say hello, and then …
In any case, I am here now and I see the market is holding on to its morning gains. Now, as we know, this is a problem for some because they believe the market is overvalued, running on air, or simply primed for a crash because, well, it has to crash eventually. The latest screaming from the hilltops is …
Hindenburg Omen: Very Ominous, Highly Technical Warning Sign Returns
I get it. The wild-eyed wanderers have to latch onto whatever they can to sell the fear. The problem with this one, though, is that it has some particular and specific criteria to it.
- A technical analysis pattern for stock traders has pointed to an impending crash in stocks, adding to an increasing chorus of voices that have turned bearish on equities for the second half of the year.
Another problem with the above is that it is from August 16. This is a problem because the particular and specific criteria that created the omen back then have come and gone. The belief is a number of technical indicators come together in such a way that a market crash is inevitable, or so the believers claim because these criteria were present in 2000 and 2008. Here is the problem in a nutshell, though.
- If ALL of these measures are hit on the same day, we start to get nervous. If this occurs a second time, within a 30-day period, the Hindenburg Omen is triggered, and a serious stock market decline is expected to follow within the next 40 days.
I am no math genius, but the number of days since August 16 is, well, far more than 30 for a second occurrence (the indicators just appeared again). As well, the lack of uniformity on the timing of the appearance of the indicators is a problem.
- Also of note, the 30-day time period varies among analysts. Some use a 36-day period, some use 30 calendar days, and others use 30 trading sessions.
Wow! How accurate could these bones be? Each oracle sees a different pattern when scattered. No matter. Let’s all stay alert and keep our eye on the market over the next 40 days. The oracles have spoken, so get ready for the sky to fall. In the meantime, ignore the fundamental driver of the market – corporate earnings, which derive from improving economies.
- An unexpectedly strong improvement in a Chinese manufacturing survey shored up markets Thursday despite concerns over the country’s banking sector that analysts fear may prompt a tightening in monetary policy.
- Boeing Co reported a 12 percent jump in profit per share and raised its full-year forecast, sending its shares up more than 3 percent in premarket trading. Net income rose to $1.51 a share from $1.35 a year ago as revenue increased 11 percent to $22.13 billion.
Maybe it is me. No, it is me. I am cynical when it comes to the soothsayers predicting the market based on something similar to the casting of bones. It strikes me as odd that these “analysts,” these believers, have not moved past the ancients in their thinking. They have merely turned in the bones for a series of numbers, and when they don’t actually predict correctly, they then go back and throw the bones again and they will keep doing it until they are right. Sick with the fundamentals and you will make money.
Trade in the day; Invest in your life …
