Ever heard of the Hindenberg Omen? Neither have I, but read below and the attached article.
We know that in US, not all stocks have enjoyed the same upward trajectory that the indices have been experiencing, in fact there are a lot of stocks making 52 week lows as well. It reflects what is really happening in the world- a selected number of companies and individuals are getting wealthier, whilst the majority of 'others' are experiencing real doldrums. Just as you should not belief our or US official unemployment rates- they are high double digits in certain sectors and regions of the economy. Hindenburg Omen
The Hindenburg Omen is essentially a breadth indicator. It measures diverging breadth during a stock market rally.
Conventional trading wisdom is based on the idea that when the stock market is going up, most stocks should be making 52 week highs together. The Hindenburg Omen notes that a problem is brewing under the rally because A LOT of stocks are making 52 week highs (going up) while A LOT of stocks are making 52 week lows (going down) at the same time. In other words, breadth is diverging.
There’s a Hindenburg Omen for the NYSE and a Hindenburg Omen for the NASDAQ. Over the past 6 trading days, there have been a combined 8 Hindenburg Omen signals (from NYSE and NASDAQ).
This is extremely rare and has only happened 3 times in history:
September 11 2018 (current case)
December 10 2014
December 16 1999
July 6 1990
In all of these 6 historical cases, the S&P 500 began a “big correction” or bear market within the next 6 months
