Hindenburg Omen

AAA

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).

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. 52-Week High/Low

    The highest and lowest prices that a stock has traded at during ...
  2. Crash

    A sudden and significant decline in the value of a market. A ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. New York Stock Exchange - NYSE

    A stock exchange based in New York City, which is considered ...
  5. Breadth Indicator

    A mathematical formula that uses advancing and declining issues ...
  6. Divergence

    When the price of an asset and an indicator, index or other related ...
Related Articles
  1. Be Aware Of The Hindenburg
    Technical Indicators

    Be Aware Of The Hindenburg

  2. What causes a significant move in the ...
    Investing

    What causes a significant move in the ...

  3. How do investors lose money when the ...
    Investing

    How do investors lose money when the ...

  4. The Greatest Market Crashes
    Budgeting

    The Greatest Market Crashes

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center