We actually witnessed the occurrence of another Hindenberg Omen for 2010. This technical indicator has been a prelude to many market crashes and corrections alike. The previous signal happened in August of 2010 and many spoke of the gloom ahead. However this never happened and what resulted was a large rally and false signal which happens. We must remember its a probability business and never a sure thing. With that said, this new Hindenberg Omen signal which took place on Dec. 23rd has gone unnoticied by many. It must be largely due to the fact that it occured during the holiday season and most are on vacation, and also because many are thrilled by the rally and cant see a crash occur.
Remember, its a game of probability. There's about a 1/4 chance no correction (5%) occurs, 1/2 chance a %5 correction, and 1/8 chance a Crash occurs (20%+). This time i feel its VERY PLAUSIBLE we get a Correction(5-10%) given the sentiment of the market, but i doubt it would be any more than that mainly due to the Fed's money printing.
The H.O. expires in Apri.
Forcast:
Sideways action into March 8th 2011. (Mid January Selloff and Early Feb Selloff 5-10%)
March -July-> Dow 13,000 by July 2011 with sideways action for the rest of the Year.
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