'Hindenburg' Omen Creator Warns of Possible 20% Stock Decline


Jim Miekka, deviser of the so-called "Hindenburg Omen," says that stocks could drop by 20% from their level earlier this month.

Miekka's omen is an indicator of major stock market crashes and is named after the 1937 disaster of a passenger airship. He created it using a formula from data including 52-week stock levels and moving averages of the New York Stock Exchange.

The indicator was triggered two weeks ago, with two more appearances this month, The Wall Street Journal says. Now, Miekka is warning of a possible 20% decline from the market level at the first triggering.

"It's like a funnel cloud," Mr. Miekka says. "You don't get a storm with every funnel cloud, but now that we're seeing several funnel clouds, I definitely think I want to stay in the storm cellar."

Others are more skeptical.

"People are grasping at straws and always looking for someone who might have all the answers," Jeremy Siegel, finance professor at the University of Pennsylvania's Wharton School of Business, told The Wall Street Journal.

Miekka publishes a newsletter called "Sudbury Bull & Bear Report." It has about 100 subscribers.