Could the Hindenburg Omen Foretell a Market Crash?

Oh the humanity! This article points out an interesting indicator of a possible market drop off coming down the pike.

But first the facts. There was a correction in the markets this week, and the sell-off triggered the Hindenburg conditions. The Hindenburg Omen occurs when an unusually high number of companies in the New York Stock Exchange reach 52-week highs and lows at the same time. The proportion of NYSE stock highs and lows must both exceed 2.2% of the total listed on the exchange. The Hindenburg Omen last occurred in October 2008, according to UBS data.

It seems to be a fairly robust idicator according to this:

In the mood for some more Hindenburg Omen doomsday numbers? The probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, according to historical data quoted on Benzinga. It usually takes place within 40 days of the first Hindenburg event. The probability of a panic sellout was 41% and the probability of a major stock market crash was 24%.

There seems to have been 5 of them right before Black Monday in 1987, and 6 of them before the Tech Wreck in 2000 according to this research site. Also if you count 40 days from the first Hindenburg Omen which was Thursday we get the 8th of October which will be just 4 trade days away from the 18th which was Black Monday in 1987.

Even if this is not true it is a good idea to take some money off the table until growth picks back up. I have moved into cash for the most part and intend to buy back in when stocks are cheaper. I mean the Fed is talking about slowdown and is buying Treasuries. The stimulus was a absolute failure and we are still barely creating any jobs (71,000 new jobs this last month is a joke.) Also companies have stopped building inventories so it is up to the beleaguered consumer to actually prop up the GDP.

Also we have a White House that doesn't know how to create a job without spending $70,000 or more per job. Plus, they seem hell bent to raise taxes during a recession which is bad no matter what sort of economist you are. So stocks will probably languish for a while.