It is worth mentioning a technical
indicator for stock market trading, the Hindenburg Omen, which was named after
the well-known crash of the German airship in the late 1930s.
When both percentages of new 52-week
highs, and new 52-week lows, over the total number of stock issues which are
traded in the NYSE platform surpass 2.2% on a specific day, it foreshadows a
potential stock market crash.
The mechanism behind this technical
indicator is that traders and investors are very uncertain about the market’s
future movement. When this splitting in
the market reaches an abnormally high level, this phenomenon usually leads to a
market disaster.
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