I had seen the "Hindenburg Omen" mentioned last week. It's a little known technical stock market indicator that has a fairly good track record in predicting major market corrections.
You can read about the technical details here. It doesn't send off a signal that often so when it does, some market participants take notice.
It should be interesting to see what happens over the next few months.
The thing that concerns me more though is the report I read about 401K hardship withdrawals are at a record level. I'm really not surprised. If you're in a financial bind and need money to survive right now, that retirement nest egg looks pretty darn good. You figure you can always work extra hard in the future but you need to survive today in order to get to that future. Have you ever wondered how all of those discouraged workers who quit looking for a job are surviving? I bet many of them are taking "early retirement".
I don't have to tap into my retirement funds yet but I haven't added to my SEP IRA in the past two years where previously I was able to make the maximum contributions allowed.
So with people withdrawing their retirement funds early and others not contributing as much as they were, I don't think that bodes well for the stock market.
Overlay that with the Baby Boomer generation starting to retire last year and that puts more selling pressure on the stock market.
So beware of the Hindenburg Omen. The general demographics and the finanacial distress of many stock market participants might allow something like this to trigger a big market crash.
Update August 25, 2010
Third confirmed Hindenburg Omen was yesterday. This make a crash more probable.
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