You've no doubt heard the "crash talk" intensifying after two triple-digit down days. But after reviewing more than 100 commentaries, there are exactly two and a half I take seriously.
The one we'll start with can not only help you now – as in today. It can also give you a permanent edge, because most people will never know how it works.
That's a shame.
The indicator you're about to see has predicted every major market inflection point since 1985.
And that's why I need to show you its current "readings" while there's something you can do about it all. We'll look at four moves, in fact. Taking an initial stake in the shares below – or adding to your position – is just one of them…
First, here's the indicator that can give you as much as a 30-day "heads up"…
The "Hindenburg Omen," and Why We Take It Seriously
Named after the airship disaster of May 6, 1937, the Hindenburg Omen is about as doom-and-gloom as it gets. It's also esoteric, which leads a lot of people who don't understand it to pooh-pooh it.
That's a mistake.
The Hindenburg is one of the most insightful indicators out there, for two reasons:
|1.)||It's predicted every major market inflection point since 1985; and|
|2.)||It's up to 90% accurate in predicting market selloffs resulting in at least a 5% correction within 30 days.|
That sounds bad, but it doesn't have to be.
The Hindenburg is like a warning light on the dashboard in your car. In that sense, the real value is not that it's flashing… or even that it's lit.
What the Hindenburg is telling you is to prepare ahead of time or, for lack of a better description, to check under the hood before you have a problem.
There are very few stock market indicators that afford you the luxury of knowing what could happen before it does.
The other important thing to understand here is that 90% is not 100%. Despite the fact that the Hindenburg had triggered five readings in the last nine trading sessions as of Tuesday night, there are no guarantees the markets will crash – 10% is a lot of wiggle room.
Remember, the only sure things in life are death and taxes. Everything else is just a possibility.
Bernanke's meddling and trillions of dollars, for example, should have us living in a modern-day version of the Weimar Republic with 1,000% inflation or more. But we're not.
The Fed was guaranteed to fail, according to plenty of economists – yet it hasn't. I wish they'd dismantle it, but that's another issue.
Everybody "knew" Facebook was a slam-dunk IPO – only investors were the ones who got slammed.
That's why it's important to put things in perspective and view the Hindenburg for what it is: a dashboard warning light, albeit a very accurate one – especially since we've had back-to-back triple-digit declines this week.
So here's what to do when it flashes…
About the Author
Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and Strike Force, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.