August 20, 2010

Market crash coming says economist

POLITICS - A huge market crash is coming says famed economist Jim Miekka, who discovered the famous market indicator ominously called the Hindenburg Omen.

“It looks like the probability of a decline. I would expect it would happen at the end of September, the beginning of October,” says Miekka.

Miekka used to be a high school physics teacher but when he became blind 24 years ago he had to retire and became an economist. Using data from stock markets he created a market indicator system which accurately can predict long term major ups and downs in the stock market. Now 50 years old he publishes the Sudbury Bull & Bear Report.

His creation / discovery of a system which can predict market crashes and rallies has since made him famous and his market reports highly respected in the field of economics. He is the economist other economists are looking to when they are drafting reports.

His system's ability to predict a sudden market crash is the most interesting of all. The Hindenburg Omen requires:

• The daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows are both greater than 2.2 per cent of total NYSE issues traded that day.

• The smaller of these numbers is greater than or equal to 69 (68.772 is 2.2 per cent of 3126).

• The NYSE 10 Week moving average is rising.

• The McClellan Oscillator is negative on that same day.

• New 52 Week Highs cannot be more than twice the new 52 Week Lows.

Basically what happens is if you get several Hindenburg Omens in a short time span that means a market crash is coming. If the omens are closer together and more frequent that means a crash may be coming soon.

The last Hindenburg Omen was on August 12th but there are more on the way. Miekka is predicting a crash sometime in late September / Early October, but only if three or four more omens appear between now and then and only if the McClellan Summation Index drops to 1,800 or less (its currently at 3,000). Market crashes often happen in the September to November period because the Autumn is the weakest time of the year for the stock market.

Miekka's system has been used to look back at historical crashes and its been flawlessly accurate every time. His system is backed up with precise numbers going back decades.

However the concern is now that economists and investors know about the prediction, will his system still work?

If the stock market becomes aligned in a precarious position, then yes. The system is designed to only predict stock market crashes when specific requirements are met.

“The general public is almost always wrong about the markets,” says Miekka.

Miekka also says crashes are not something to be feared. They are the economy shedding some weight and when they are over the economy bounces back with a long rally. When that happens its actually a good buying opportunity to buy stocks when they are super cheap.

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