Hindenburg Omen


DEFINITION of 'Hindenburg Omen'

A technical indicator named after the famous crash of the German airship of the late 1930s. The Hindenburg omen was developed to predict the potential for a financial market crash. It is created by monitoring the number of securities that form new 52-week highs relative to the number of securities that form new 52-week lows - the number of securities must be abnormally large. This criteria is deemed to be met when both numbers are greater than 2.2% of the total number of issues that trade on the NYSE (for that specific day).

BREAKING DOWN 'Hindenburg Omen'

Traders use an abnormally high number of 52-week highs/lows because it suggests that market participants are starting to become unsure of the market's future direction and therefore could be due for a major correction. Proponents of this indicator argue that it has been very accurate in predicting sharp sell-offs in the past and that there are few indicators that can predict a market crash as accurately.

  1. Divergence

    When the price of an asset and an indicator, index or other related ...
  2. 52-Week High/Low

    The highest and lowest prices that a stock has traded at during ...
  3. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  4. Crash

    A sudden and significant decline in the value of a market. A ...
  5. Breadth Indicator

    A mathematical formula that uses advancing and declining issues ...
  6. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
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