Two months ago, a Tampa Bay area stock market watcher named Jim Miekka won a burst of national attention when his technical indicator — called the Hindenburg Omen — started blinking a warning that the stock market could be headed for a big decline in late September.
A big drop never happened. Quite the opposite. So I called Miekka for answers.
I had interviewed Miekka, 50, in August by phone at his summer home in Maine. In between numerous CNBC reports on the Hindenburg Omen, radio interviews and calls from the Wall Street Journal, Miekka tried to explain what was behind his Hindenburg indicator.
It involved relationships between the number of new stock highs and lows happening around the same time that could trigger the Omen — a big stock drop. For that to happen, another indicator, the "McClellan Oscillator" (a measure of market fluctuation), had to turn negative.
Even so, the Hindenburg Omen was no guarantee the market would nosedive. But indicators were strong enough then for Miekka to sell out his own market holdings.
A column about Miekka — who is blind, publishes technical market insights in his own newsletter and also happens to be a crack marksman using a targeting device he invented — appeared on the bottom of the front page of this newspaper on Aug. 20. On that day, the Dow closed at 10,213.62.
On Monday, the Dow closed at 11,164.05. Not only was there no Hindenburg Omen-inspired market decline, but the Dow has risen steadily, nearly 1,000 points, since I first talked to Miekka.
The former physics teacher, now relocated to a home north of Tampa Bay for the cooler months, has not sat idle. When it became clear to him the Hindenburg Omen would not happen — he says the McClellan Oscillator never did turn negative enough to trigger the Omen — he jumped back into the market and is earning "5 or 6 percent."
"I am quite bullish at the moment," Miekka said. He finds the current market conditions similar to those during the midterm election of 1982. Next year, 2011, looks like a good year for the market, he predicts, which just like the Omen should be taken with a grain or two of salt.
Other market watchers and financial advisers, however, also like what they see in the stock markets. There is, they say, plenty of room for the market to rise, given the strong earnings of many corporations and the increasing likelihood that the threat of a double-dip recession is fading.
"Investors must remember that the markets are a forward-looking indicator," says Robert Doyle of Doyle Wealth Management, a St. Petersburg financial advisory firm. People tend to fixate on the high jobless rate and that the two biggest market corrections since the Great Depression happened in the past decade.
But those events are not driving the market, said Doyle, who makes his points with quotes from the likes of Mark Twain and investing guru John Templeton.
One of Doyle's favorites (though he's not sure who said this one): "When you hop in the car, the windshield is a lot bigger than the rear-view mirror. You're supposed to be looking forward."
Good advice. But there's a reason cars come with rear-view mirrors. It's probably worth a frequent glance.
Robert Trigaux can be reached at email@example.com.