World Equity Markets Plunge After Latest Hindenburg Omen - More Decline to Come?

By: Robert McHugh | Sat, Jun 10, 2006
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Since our most recent Hindenburg Omen Cluster formed, from April 7th through May 11th, both domestic and international equity markets have plunged, some of them crashing. The Hindenburg Omen warns of a unique set of market circumstances present that are quite rare, where we often see plunges follow within four months. We cover the particulars in a Guest Article at our website.

We first reported the April 7th Hindenburg Omen observation in April 7th's weekend issue, no. 305, available in the archives at www.technicalindicatorindex.com. We included the theory of the signal, past history and performance, and pointed out the risks of a possible stock market crash or plunge within the next four months.

This week we want to point out the devastation to equity markets that has followed. In the United States, while all the major averages are down sharply, below we see the Housing Index has crashed, down 23.3 percent. We also see that the HUI Amex Gold Bugs stock index has crashed, down 28.6 percent. The Russell 2000 small caps index has plunged 12.7 percent.

Internationally, India crashed 26.6 percent through June 8th, Japan's Tokyo Nikkei plunged 16.7 percent (we consider a crash to be a 15.0 percent decline or greater), South Korea plunged 16.5 percent, and Germany's DAX plunged 12.6 percent -- all since April, and many since May 11th.

But this is just as of June 8th. We believe there is more decline coming.

"For God so loved the world that He gave His only begotten Son,
that whoever believes in Him should not perish, but have eternal life.
For God did not send the Son into the world to judge the world,
but that the world should be saved through Him.
He who believes in Him is not judged; he who does not believe
has been judged already, because he has not believed
in the name of the only begotten Son of God."

John 3:16-18

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Robert McHugh

Author: Robert McHugh

Robert D. McHugh, Jr. Ph.D.
Main Line Investors, Inc.

Robert McHugh

Robert McHugh Ph.D. is President and CEO of Main Line Investors, Inc., a registered investment advisor in the Commonwealth of Pennsylvania, and can be reached at www.technicalindicatorindex.com. The statements, opinions and analyses presented in this newsletter are provided as a general information and education service only. Opinions, estimates and probabilities expressed herein constitute the judgment of the author as of the date indicated and are subject to change without notice. Nothing contained in this newsletter is intended to be, nor shall it be construed as, investment advice, nor is it to be relied upon in making any investment or other decision. Prior to making any investment decision, you are advised to consult with your broker, investment advisor or other appropriate tax or financial professional to determine the suitability of any investment. Neither Main Line Investors, Inc. nor Robert D. McHugh, Jr., Ph.D. Editor shall be responsible or have any liability for investment decisions based upon, or the results obtained from, the information provided.

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