'Hindenburg' Omen Creator Warns of Possible 20% Stock Decline

Jim Miekka, deviser of the so-called "Hindenburg Omen," says that stocks could drop by 20% from their level earlier this month.

Miekka's omen is an indicator of major stock market crashes and is named after the 1937 disaster of a passenger airship. He created it using a formula from data including 52-week stock levels and moving averages of the New York Stock Exchange.

The indicator was triggered two weeks ago, with two more appearances this month, The Wall Street Journal says. Now, Miekka is warning of a possible 20% decline from the market level at the first triggering.

"It's like a funnel cloud," Mr. Miekka says. "You don't get a storm with every funnel cloud, but now that we're seeing several funnel clouds, I definitely think I want to stay in the storm cellar."

Others are more skeptical.

"People are grasping at straws and always looking for someone who might have all the answers," Jeremy Siegel, finance professor at the University of Pennsylvania's Wharton School of Business, told The Wall Street Journal.

Miekka publishes a newsletter called "Sudbury Bull & Bear Report." It has about 100 subscribers.

Increase your money and finance knowledge from home

Asset Allocation

Learn the most important step in structuring an investment portfolio.

View Course »

Forex for Beginners

Learn about trading currencies and foreign exchange transactions

View Course »

Add a Comment

*0 / 3000 Character Maximum

3 Comments

Filter by:
j0shwerk@yahoo.com

I think that there is a self-fulfilling prophecy dynamic to this indicator, in much the same way if everyone believes a double-dip recession is coming, then it will. It's this dynamic as well as some legitimately negative news (housing, money flows) that caused me to blog this morning 'Hindenburg Omen: Myth, Reality, or Both?' on ProofTrader.

August 26 2010 at 2:46 PM Report abuse rate up rate down Reply
obama fools

JUST THE WORD OBAMA MAKES STOCK DROP 25% ADD DUMMYCRAPT TO IT IT FALL A 25% MORE GET REAL PEOPLE THE CHANGE IS NOT WORKING UNLESS YOU ARE A MUSLEM............THINK ABOUT IT IF YOU CAN.......

August 26 2010 at 8:22 AM Report abuse rate up rate down Reply
1 reply to obama fools's comment
donut999

huh?

August 26 2010 at 10:14 AM Report abuse rate up rate down Reply