(Hindenburg Omen stock market crash story updated for end of recession call by NBER, September market rally)
NEW YORK (
TheStreet) -- Remember when the Hindenburg Omen seemed an almost-certain predictor of an impending stock market crash? It may seems like eons ago, or at least one ended-recession ago, but in fact, it was just August 13 -- notably, a Friday the 13th -- when the obscure technical indicator became more important than Federal Reserve commentary, GDP and housing data, and just about any of the regular trader means of prognosticating the future direction of the markets.
The Hindenburg Omen reared its ugly head of technical stock market crash signals three times between August 13 and the beginning of September.
At the time of the first Hindenburg Omen trigger, the blog
Zero Hedge described the Hindenburg Omen as "Easily the most feared technical pattern in all of chartism (for the bullishly inclined). Those who know what it is, tend to have an atavistic reaction to its mere mention."
Writing on
RealMoney.com some weeks later, when the third Hindenburg Omen trigger was signaled, Rev Shark noted that there continued to be some statistical support for the indicator. "One month later, we have had a mean loss of 1.7% and have been positive just 41% of the time. So it isn't just a sensationalistic name. There has tended to be a pattern of weakness when the Omen is triggered," he said.
Ah, it all seems like such a quaint technical trading cottage industry now. Seemingly the only thing that crashed and burned in September, in fact, was the Hindenburg Omen itself. The September market rally culminated in Monday's recession death certificate being signed by the influential group of economists known as the National Bureau of Economic Research. It may have been the longest recession since World War II, at 18 months, but the markets gave little sign that they were about to crash and burn again since the technical market data equivalent of Chicken Little made its dire call.
In case you missed the play-by-play -- and let's hope you did, so you didn't cash out of all your investments and miss the September gains -- a mid-August trading session on the New York Stock Exchange registered a technical anomaly known as the Hindenburg Omen. Read: just like the doomed German airship, the markets were fated to crash and burn. It takes two Hindenburg Omen events within a 30-day window to trigger
the end of life in the markets as we know it, and there were three Hindenburg Omen events, yet no end to life, or the markets.
The Hindenburg Omen's 15 minutes of market fame became such a viral media epidemic that even Fox News personality Glenn Beck mentioned the technical indicator on his show -- not nominating it for a seat on a Tea Party ticket -- but somehow, finding a way to link the Hindenburg Omen to President Obama's obviously flawed economic policies.
