Reply #23: The Mogambo Guru: No Short Supply of Freaking Doom! [View All]

http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG062707.html

I don't know why I am so edgy here lately. Maybe because Federal Reserve Credit last week only increased a little, going up $2.3 billion to $852.3 billion, which is about the same level of Total Credit as it was in January, six months ago.

Or maybe it is because Anthony M. Cherniawski of thepracticalinvestor.com writes that, suddenly, three Hindenburg Omens have been sighted.

So what is a Hindenburg Omen? Robert McHugh of Main Line Investors, accurately assessing my limited intellectual abilities, explains just the essence of it, which is "the alignment of several technical factors that measure the underlying condition of the stock market - specifically the NYSE - such that the probability that a stock market crash occurs is higher than normal, and the probability of a severe decline is quite high."

Mr. Cherniawski says that according to the facts at Wikipedia.com, this "now confirms the probability of a major decline in the next 120 days. The probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen within the next 41 days after its occurrence is 77%, the probability of a panic sellout is 41%, and the probability of a real big stock market crash is 25%."

He admits that the 77%, 41% and 25% statistics are a long way from any precision as far as forecasting goes, and, "The occurrence of a confirmed Hindenburg Omen does not necessarily mean that the stock market will go down. On the other hand, there has never been a significant stock market decline in history that was not preceded by a confirmed Hindenburg Omen."

And on the third hand, a 77% probability ain't hay, either!



Plenty more....also with a link to an excellent essay by Dmitry Orlov