Are We on the Titanic?
Both the “Hindenburg Omen” and “Titanic Syndrome” are in the news lately, and I was asked to comment on them.
First some background: Both indicators look at new lows picking up during a bull market.
Basically, the hypothesis is that the stock market doesn’t do very well when some stocks are falling apart while others make new highs.
It’s like a crack in the system. The problem with both indicators is they aren’t systematized.
You’ll often see some statistics like performance over the next week, month, 3 months, 6 months.
That’s not a trading system. A trading system has both buy and sell signals.
Let’s say that you sell right now because both the Titanic and Hindenburg indicators gave a sell signal…now when do you buy?
Are you going to be like a buddy of mine and cash out of stocks last December, then never buy back in?
That’s like hitting the brakes at a stop sign, then never moving your foot over to the gas.
A complete strategy is one like the Smart Money Indicator. Interestingly, it’s still out of stocks and now in TLT bonds.
Clearly it’s been wrong after a great buy signal from January to September of this year.
Meanwhile, the short-term Smart Money (which is built into Portfolio Boss) has been in the S&P 500 since October 7th (up 6%…it’s been on fire).
The ‘DB Transaction’ strategy is up over 10% during that same time period.
My point is that none of these strategies give a crap about what these Titanic or Hindenburg indicators are saying, and they’ve made many of our members a lot of money.
Unless you want your trading account to sink like the Titanic, I suggest you use a fully systematic trading method and ignore the media industrial complex.
Dan “Prince of Proof” Murphy
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