Hindenburg Omen is now a part of the media agenda...

Hindenburg Omen' Flashes Technical Gauge and Its Creator Sense Stock Gloom; 'Good Conspiracy Theories'?

BY STEVEN RUSSOLILLO AND TOMI KILGORE

Forget about Friday the 13th. Many on Wall Street took to whispering about an even scarier phenomenon—the "Hindenburg Omen."

The Omen, named after the famous German airship in 1937 that crashed in Lakehurst, N.J., is a technical indicator that foreshadows not just a bear market but a stock-market crash. Its creator, a blind mathematician named Jim Miekka, said his indicator is now predicting a market meltdown in September.

Wall Street has been abuzz about whether the Hindenburg Omen will come to bear, with some traders cautioning clients about the indicator and blogs pondering all the doom and gloom. - Wall Street Journal

I find it truly saddening that the media will salaciously report news with hype, derision and misinformation. While there was a Hindenburg Omen this week, we did not need one to know that there has been a huge amount of conflict building in the markets. The trading over the last months has been enough to satisfy that deduction.  However, that's all this particular Hindenburg Omen tells us. "There is internal dissension in the markets." For Hindenburg Omens to matter there have to two or three of them in a reasonable period of time. The average trough low after a Hindenburg Omen is 8%. That is not a crash that's one day volatility in our current markets.

While I obviously think the asset markets are extremely overvalued and would expect large moves to the downside, the Wall Street Journal could have used this opportunity to educate people and rather simultaneously use it to scare people and berate doom and gloom views as hype. So, which one is it Mr. Wall Street Journal? Well, I guess its neither because its just about selling advertising while trying to espouse conservatism and sooth long-term investors by berating nay sayers . But this is another example of irresponsible reporting.

While I wrote  a program that alerts me to these Hindenburg Omen's, they are meaningless unless they occur in groups. Additionally, there have been quite a few isolated HO's that have resulted in immediate reversals. It would have been nice for the WSJ to educate and report without an agenda but sadly this is just another example of our conflicted and irresponsible media empires.

Issues arguing against the top of Primary Wave 2 here

One of the problems that I have with the market topping here is that we have not seen a single Hindenburg Omen. I would expect to see atleast one before we top...so, this does leave the possibility of an A = C or one higher fib ratio for C to A type situation - possibly pointing to the 9,950 to 10,522 area on the Dow and 1,048, 1,090 to 1,158 on the SP500.

Gold is not cooperating. Pattern looks very much like danerics chart from last week. (Daneric's Elliott Waves) Break over 972 in Gold would be bad for the deflation trade. Best case scenario, in my opinion would be to get Peter Schiff and all the inflationists screaming victory if the trade seems to work even a little bit and then shock-the-monkey with the deflation trade. So, quick pop in Gold and then a drop. Deneric suggested that Gold could rally from this pattern even if the dollar is not cooperating or does not have a commensurate sell-off. 


We have to watch the Dollar pattern closely - as it is potentially unfinished. And the wave structure is very sloppy. Sloppy patterns can be successful, and there are some good things about the dollar action here, so, if the dollar index breaks over the declining trendlines at 77.62 decisively - then this would be a go for the dollar. If the dollar fails here - it does not have much lower to go in my opinion...probably 77 to 76.5ish. (let's hope gold does not make it to 1085 if it does breakout though)

There were three very small moves in the McClellan Oscillator last week - all in a row...one small McClellan move usually indicates a big move is about to happen. At least one range day, but this is a little more abnormal so it could mean more. This is an argument that if we breakdown here, that its a serious breakdown. Otherwise, we could get a rally that's also a signifcant move.