While it may sound like a sequel to The Girl with the Dragon Tattoo, a Hindenburg Omen isn’t any fun. If you want to call attention to potential bad news, it’s hard to go wrong with the name Hindenburg.
What was the Hindenburg?
Paul von Hindenburg was a celebrated World War I general and a less celebrated president of Germany. The more infamous Hindenburg, however, is the dirigible named for the general and its corresponding disaster.
If you’re a classic rock lover, you probably know the cover of Led Zeppelin’s first album has an image of a zeppelin crashing. That’s the LZ 129 Hindenburg, a gas-filled airship that traveled around the world. (A zeppelin is like a blimp but with a rigid, often metal hull. Add an A to Led, and you can figure out from where Jimmy Page and company derived their name.)
On May 6, 1937, the Hindenburg exploded in New Jersey, killing 36 people. The tragedy dashed the nascent field of zeppelin travel and had a massive impact due to vivid photographic and radio coverage. The symbolic power of the event lives on in a variety of expressions, including of course the Hindenburg Omen.
An omen is “anything perceived or happening that is believed to portend a good or evil event or circumstance in the future.” Many people already know this due to a certain creepy series of films.
But what about the stock market?
As you’ve probably surmised, the aforementioned Omen alludes to a potential crash, of the financial kind. In simple terms, the Hindenburg Omen is a technical measure of the stock market that may indicate the potential for a market crash or decline. The financial analyst Jim Miekka receives credit for the name, though the measure precedes him.
Basically, the Omen occurs if a particularly large number of stocks on the New York Stock Exchange hit new 52-week highs and lows on any given day. The number of new 52-week lows must be greater than the number of new 52-week highs.
This combination reflects an ominous level of instability and divergent movement in the market. It is not, however, a guarantee of any particular outcome in the economy. A single instance of this is an unconfirmed Hindenburg Omen. If the condition has occurred at least once more in 30 days, it’s called a confirmed Hindenburg Omen.
The stock market has another bizarre term: quadruple witching days. Find out what that means, right here.
