The Hindenburg Omen - one of the most dreaded bearish indicators on Wall Street - is flashing again. In fact, we've had five instances just in the past several trading sessions. And get this - it's 90% accurate in forecasting stock market corrections in excess of 5% within the following 30 days.
- Hindenburg Omen Hovers Over Bulls
- The Most Important Number to Watch This Week
- The Only "Crash Talk" Worth Trading
- Why You Can't Afford to Ignore the Hindenburg Omen
The esoteric - yet highly accurate - Hindenburg Omen we looked at Friday may suggest the probability of a market crash. But the number I'm watching this week could cause one.
As a standalone figure, of course, the yield on 10-year Treasuries is small. But the amount of money it impacts worldwide is flat-out staggering.
Out of the estimated $1.5 quadrillion dollars' worth of derivatives on the planet right now, roughly $500 trillion is specifically related to interest rates.
So you can see why the 10-year gets so much attention. But right now, I'm watching it even more carefully... for one important reason.
When the Hindenburg was sounding the alarm last week, 10-year Treasury yields spiked at the same time, up to 2.8210% before relaxing a bit in early trading last Friday as of press time. That suggests to me the Fed is losing control over interest rates.
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...
Here are just a few of the headlines from the past week:
- "Hindenburg Omen is Just Hot Air"
- "Why 'Hindenburg Omen' Is Just a Superstition"
- "Hindenburg Omen is idiotic, and if you believe in it, you should lose your right to own stocks-or anything"
"Let's not mince words on this subject: This is an example of the worst kind of 'technical analysis' - a market signal essentially designated for media sound bites," Adam Grimes, chief investment officer at Waverly Advisors., told The Wall Street Journal. "The markets may well decline from this point, but they will not do so because of some cleverly named signal. The Hindenburg Omen, we have to say, is mostly hot air."
Nonbelievers in the Hindenburg Omen say it correctly predicts a stock market crash only 25% of the time, and point out the last time it appeared, in 2010, the markets just kept on rising.
"In 2010 the accuracy of the 'Hindenburg Omen' indicator went up in flames and the current situation suggests the same result in 2013," huffed Daryl Guppy on the CNBC Web site.
Yet an appearance by the Hindenburg Omen has preceded every stock market crash but one since 1985, and if you look closely at the numbers this indicator's track record is remarkably accurate.
Maybe the doubters don't know as much as they think they do.
"They call it bogus because they don't understand it," said Money Morning Chief Investment Strategist Keith Fitz-Gerald, who called the Hindenburg Omen one of his favorite indicators.