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Mr. Hindenburg Omen: Get Out Now, Before Market Crash

Miekka says that talk of a stock market crash remains hyperbolic, unless another Hindenburg Omen trigger occurs in the next 30 trading days. However, even lacking another Hindenburg Omen event, he thinks a correction as large as 20% is a likely scenario, and should signal to investors that there will be a better buying opportunity after the fall dip.

Miekka says that reviewing the historical data, it's always better to buy in mid- to late-November after the Presidential cycle mid-point and then hold equities until the January rally period two years later. Miekka says that this holding period generates an average return of 20% on the broad markets, or 60% on the Nasdaq.

The one technical indicator that is defying Miekka's bearishness is the McClellan Summation Index. It's not to be confused with the McClellan Oscillator, the short-term indicator of the ratio of NYSE advancing issues as compared to declining issues. The McClellan Summation Index, more or less the long-term version of the McClellan Oscillator, remains at high levels and Miekka said this might insulate market for a few weeks and stocks may be range-bound until September.

Miekka thinks that a decline in the McClellan Summation Index below 1800 - it is currently above 3,000 -- could place the steepest part of the Hindenburg Omen-predicted decline sometime in September.

"I've gotten out of the market. Since I've published so much on the Hindenburg Omen, I decided to follow my own advice and play it safe," Mr. Hindenburg Omen said.

-- Written by Eric Rosenbaum from New York.

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