Hindenburg Omen returns as Vix hits pre-crash low
Posted on 21 December 2010 with 4 comments from readers
Two major market directional indicators are pointing in opposite directions, as our friends over at Agora Financial note today in the Five Minute Forecast.
The Hindenburg Omen that predicts market falls based on an analysis of 52-week highs and lows was confirmed last week, while the Vix Volatility Index sits at lows not seen since the Dow’s last high:
Remember that was back in April and we got the May 5th Flash Crash of almost 1,000 points just a couple of weeks later. And Agora Financial goes one better and reminds us of the New Moon.
‘We’re smack in the middle of a ‘Puetz window’. Researcher Stephen Puetz studied eight epic market meltdowns dating back to Holland’s 1636-37 Tulip Mania. He found every one of them took place within a few days of a lunar eclipse… and each time, that lunar eclipse took place within six weeks of a solar eclipse. Heh… The next solar eclipse is Jan. 4.’
Apocalypse now?
So will the Hindeburg Omen crash and burn as it did in August with the best September for stocks in 70 years? Or will the Vix prove to be the friend of contrarians as in May? Or could that New Moon have our fate sealed?
ArabianMoney prefers to trust in human auguries and we note Marc Faber’s doom laden immediate forecast for emerging markets (click here). We can also see a storm brewing up in the euro bond markets that could be every bit as powerful as the collapse of Lehman Brothers (click here).
No prizes for guessing we are treading cautiously with investment ideas for the New Year in our latest newsletter out very soon and available only online at the click of a button (click here).
4 Comments posted by readers:
Prior to Chinese New Years stocks have always climbed in Asia. Will this year be any different?? Time will tell.. Chinese New Years around February.
I literally laughed out loud when I first saw the article in the Telegraph, http://www.telegraph.co.uk/finance , “Citi Warns of Fresh Wave of Bank Failures in Europe.” I thought, ‘Citi should know about bank failures!’ There are now TWO Citi articles that issue the same warning. You don’t see two Citi warnings about potential debt collapses in the ‘most viewed’ section of the Telegraph too often. I guess that is why they say that the smartest Citi employees stayed at the Bank. They know how bad things really are, and want to have a job somewhere that is too big for the US Government to let go under. Kind of like employment insurance at good pay.
The politicians will be busy next year. Watch what happens in Spain. I read an article about the Spanish real estate losses in either the Washington Post or NY Times. They are HUGE. Spainish banks could be a lot worse than a many people now think. And the Spanish unemployment rate is 20%. You think they might need a bailout? I do.
Then we have Meredith Whitney all over TV saying US State & local governments will lay off between 1&2 MILLION employees in the next 18 months. That sounds a bit on the high side to me. I can see 600,000 or so. The budget doesn’t have to be balanced only with job cuts. Taxes can be raised a little. If they do lay off over about 1.5 million, I look for another recession starting in late 2012. The real estate market will take another big hit because many public employees in the USA make above average incomes. (I wasn’t among them.) They lose their jobs, and defaults will skyrocket on a lot of nice homes. That will hit the banks with MORE losses. Just today, my bank was forced to merge with one on the Mississippi gulf coast. Whitney Bank had been in business for 138 years. They never closed during the Great Depression. But Florida real estate losses took them out. They got greedy. “11,000,000 Americans are now underwater on their mortgages,” says Don Pebbles, real estate tycoon, on CNBC TV Kudlow Report. Watch what happens when interest rates start to really rise.
This crisis isn’t anywhere near over.
Now I have to WRAP the Christmas presents. This Christmas work is endless. But I’m still on schedule for Friday night delivery. Did you know that without forced Christmas gift spending, US capitalism would collapse?
I think it’ll take more than Christmas presents to save US capitalism.
Making sure financial regulations are fit for purpose AND ENFORCED (even against politicians’ friends) might pull capitalism back from the brink, otherwise we’re all headed back to the middle-ages… or possibly a stone-age with a nuclear glow.
Sounds a lot like 1990’s UK, negative equity. Look on the positive side, if you have cash you will be able to pick up some really cheap US property to rent to Americans.
Cash in hand will be king soon.