The market signal, named for a German airship that caught fire and crashed 69 years ago in New Jersey, appeared in April when unusually large numbers of stocks reached both one- year highs and lows as prices climbed.
Since then, the Standard & Poor’s 500 has fallen 2.2 percent, including a 1.9 percent loss last week to 1,267.03.
Jim Miekka, the analyst credited with discovering the barometer, said the index may be headed for a 20 percent drop. “We’ve had a market that has been undermined for quite some time by oil and interest rates, but it was the Hindenburg that told us that we should get out,” Miekka said.
The publisher of the Sudbury Bull & Bear Report newsletter in Florida, Miekka is not alone in predicting a fall.
Ralph Acampora of Knight Capital Group has forecast a drop of as much as 25 percent from this year’s highs.

How much (hot) air is in the balloon? I have no idea, but one thing for sure, never in my 20-year career have I seen so many prognosticators turn so bearish with so much conviction in so short a time as they did in May.

References

2006.05.22 IHT.com
Americas: ‘Hindenburg Omen’ is back
2006.07.04 BillCara.com
Dow = 8800 in 2H06