Investors might be atwitter over the so-called Hindenburg Omen, a technical indicator flashing a red alert for an imminent market crash, but the odds of it being right are long to non-existent, experts say.

Jeffrey Saut, chief investment strategist at Raymond James (RJF), has made many adroit calls since the last market crash and rally, and he told clients Monday morning that the Hindenburg Omen is, well, hooey.

"While the various markets can certainly do ANYTHING, it's typically not the snake you see that bites you," Saut writes. "Ladies and gentlemen, when so many people are asking the same 'Hindenburg Omen' question, it is typically the wrong question!"

Lousy Track Record

Meanwhile, Liz Ann Sonders, chief investment strategist at Charles Schwab (SCHW), made it clear to clients that the Hindenburg Omen has a really lousy track record.

"This indicator has flashed multiple times during the past 20-plus years when there hasn't been a crash," Sonders writes. "In fact, more than 75% of the time the Omen has been a false signal, according to The Wall Street Journal."

And if you want an opinion from someone who doesn't work for a big brokerage house, Lawrence McMillan, editor of The Option Strategist newsletter, has found that adherents of the Hindenburg Omen "put so many conditions on it as to render it almost useless."

The indicator has a number of criteria, including that the daily number of new 52-week highs and lows on the NYSE must be both equal to or greater than 2.3% of the total number of NYSE issues that advance or decline that day.

True, the market may very well crash badly and soon, but investors would be wise to position their portfolios based on something more than technical signal with a catchy name -- and little predicative value.

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mae13rle11

boys playing with play money on wolfstreet. I got one for you, BV, or book value, overlooked by everyone it seems but is the only real measure of value of anything tangible you are considering !

September 01 2010 at 3:03 AM Report abuse rate up rate down Reply
proaudio55110

This is one of the same idiots that said “hey, I know, let’s get risky borrowers into homes they can’t possibly afford, then bundle it together into exotic investments!!” Response: “Wow, That’s a great idea!” Or how about this one: “Let’s have the industrialized world spend tons of money they don’t have on things they don’t need!” Gosh, another brilliant idea. Certainly nothing bad can possibly happen now! I’m sure no countries will default on their obligations or collapse their currencies!

September 01 2010 at 1:48 AM Report abuse -1 rate up rate down Reply
leebouyz

"predicative"? Is that a real word?

August 31 2010 at 11:13 PM Report abuse rate up rate down Reply
goatcars2

It doesn't take a rocket scientist to figure out that anybody with capital gains will take thenm before Jan 1 when Obama raises taxes on just about everthing that would stimulate growth.....I sincerely believe this man is TRYING to wreck the economy!!!!!!

August 31 2010 at 10:33 PM Report abuse +2 rate up rate down Reply
2 replies to goatcars2's comment
ocutv

The Feds will print money to pay debt. The money will be worth less (not worthless) and import prices will sky rocket. If oil doesn't go up too much the economy will survive. Interest will go up. Housing will go up. It will be cheaper to make things here than import helping reduce unemplyment. The problem is that this will not happen in a flash, but over many months, maybe years. Until then you just have to figure out how to eat.

August 31 2010 at 7:30 PM Report abuse +1 rate up rate down Reply
1 reply to ocutv's comment
xonon1

Democrats and believers in the current administrations economic policies please go "all in" on the stock market now. Please put everything you own into the market in anticipation of the great promised economic recovery. Put you money where your mouth and posts are.

August 31 2010 at 7:29 PM Report abuse +5 rate up rate down Reply
rumbuddyboo

Be prepared. Think for yourselves people. You have been idiot's long enough. People rather watch there t.v. shows than see what is happening around them. The stimulas money is dry. Well see when this happens and when are troops come home, There next mission well be HERE. Martial law, when thing's go crazy.

August 31 2010 at 5:24 PM Report abuse +4 rate up rate down Reply
2 replies to rumbuddyboo's comment
j0shwerk

It may be hooey from a technical standpoint but if enough people believe it, it could come true anyway. It's kind of like the idea that a 'double dip recession' is coming... the continued repeating of it may cause it to come true, as consumers put off big purchases, businesses put off hiring, etc. My full take on this self-fulfilling prophecy dynamic here: http://prooftrader.com/symbol/QID/643/Hindenburg-Omen-Myth-Reality-or-Both

August 31 2010 at 4:31 PM Report abuse rate up rate down Reply
hemipwr54

You can only shore it up for a short time , because even the wealthy and powerful can only stand so much loss before they pull out as well . Bernanke is scared and Buffett is moving assets , something is up .

August 31 2010 at 4:29 PM Report abuse -1 rate up rate down Reply
L R Adams

Hooey -. Sounds about right. Just like the .com plunge and the housing bubble. Both were most unlikely and a bunch of nonsense.

August 31 2010 at 4:17 PM Report abuse +3 rate up rate down Reply