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What Exactly Is the ‘Hindenburg Omen’?

Tuesday, 17 Aug 2010 | 7:33 PM ET
Off the Charts
Cramer goes over the recent chatter of an impending crash.

Beware, investors! A terrifying new pattern in the charts emerged last Thursday, Aug. 12, one that supposedly portends doom for stocks. A crash, even, if history is any guide. It’s called the “Hindenburg Omen,” and it has appeared specter-like before every major downturn since 1985. It’s most recent haunting: October 2008.

But wait: Mad Money viewers know that Cramer views technical analysis as, for the most part, nothing more than divination. It’s a voodoo of sorts, by which technicians study past patterns in stock movements to predict where those stocks will go next. The only reason Cramer ever defers to the charts is because money managers often consult them. And because these large institutional players literally set market prices, it’s important to know what they are thinking at any given time.

But when it comes to the Hindenburg Omen, Cramer’s a touch doubtful. To find out if he was right, he used this week’s “Off the Charts” segment to take a deeper look at it. Is this omen for real? Watch the video for his full report.

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