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Hindenburg Omen Reached Again: Is a Stock Market Crash Imminent?

Could the Hindenburg Omen simply have been an upside-down market signal? Instead of being a signal to sell, will it end up being relegated to the dustbin of trading history as another classic case of Warren Buffett's maxim to buy when you smell the most fear in the markets?

In the midst of the September rally and the NBER pronouncement of the Great Recession's end it may seem that investors who cashed out of investments were duped by the Hindenburg Omen. Yet with President Obama conceding at a Town Hall meeting on Monday that the recession hasn't ended for many Americans -- even if NBER says it ended in June 2009 as a technical economic measurement -- have things changed all that much for the investor or average American?

The Federal Reserve Open Committee meeting message on Tuesday was no ringing endorsement for the economy, keeping rates the same and with the Fed saying it may still step in to bolster the economy. The markets couldn't hold their gains on Tuesday after the Fed commentary.

More than half of U.S. states (27 states) had unemployment rates that rose in August, the largest number in six months, the Labor Department said Tuesday, worse than the previous month and the highest number of states seeing the jobless rate increase since February.

It's still the mid-point of the presidential election cycle, too, historically a bad time for the markets, and the Hindenburg Omen did sound its warnings ahead of the month of October -- i.e. stock market crash central.

It may not be mere anarchy loosed upon the markets, but the bull is far from charging ahead. Indeed, the recent signals have overshadowed the Hindenburg Omen, and raised the question, Are you, Mr. Investor, any more confident about the immediate market outlook or still expecting the Hindenburg Omen to crash and burn the economy -- even, if now, thanks to NBER, it would have to be classified as a new recession?

Take the poll below to see what TheStreet has to say about this issue.


What is your take on the Hindenberg Omen now?

I'm still gonna sell everything before the zeppelin crashes.
Buy, buy, buy; it's onwards and upwards from here.
The Hindenburg Omen and the NBER recession call are both meaningless pseudo-science.

-- Written by Eric Rosenbaum from New York.

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