US stocks triggered 7 times in the past month, how accurate is the "Hindenburg Omen"? A-share accuracy rate as high as 92%!

A technical indicator designed to capture the risk of systemic adjustments in the stock market is flashing at an unusually high frequency in the U.S. stock market, sending warnings to A-share investors through overseas linkage channels.

According to the latest strategy report from Zheshang Securities, as of late June 2026, the "Hindenburg Omen" signal has been triggered seven times in the U.S. stock market in the past month, with over ten total triggers since the start of 2026. The Dow and the NYSE are both above their 50-day moving averages, the proportion of NYSE stocks hitting 52-week highs and lows both exceed the 2.2% threshold, and the McClellan Oscillator has been in negative territory multiple times between April and June—all four trigger conditions are met simultaneously. Meanwhile, the information technology and communication services sectors together account for 47% of the total market capitalization of the S&P 500, with the highly concentrated position structure further amplifying market fragility.

For A-shares, Zheshang Securities points out that the first three conditions of the Hindenburg Omen are basically met. The overall market remains in a bullish trend, with a similarly high degree of internal structural divergence. However, the McClellan indicator signal is still unclear and does not constitute a strict trigger. The institution expects that due to overseas linkage effects, A-shares may experience increased short-term volatility, but it maintains a medium-term view of a systematic "slow bull" moving steadily forward.

Historical data provides an important reference for this signal. Zheshang Securities back-tested approximately 20 trigger events in U.S. stocks since 1985. After the signal is triggered, the probability of the Nasdaq falling and experiencing a cumulative drawdown of more than 10% within 40 trading days is 67%, and the probability of it evolving into a major adjustment is 33%. After adapting the signal to A-shares, between 2000 and 2024, the predictive effective probability for medium-sized drawdowns at 12 trigger points was as high as 92%. However, the indicator is not perfect—it has produced multiple "false alarms" during periods of large-scale quantitative easing by the Federal Reserve. Therefore, it serves only as a probabilistic warning, not a direct sell signal.

Indicator Analysis: What is the "Hindenburg Omen"

The "Hindenburg Omen" was proposed by blind mathematician Jim Miekka in 1995, named after the 1937 Hindenburg airship disaster, implying the risk of collapse lurking when the stock market is running at high levels. Its core logic is: when the overall market is still rising, if the number of stocks hitting 52-week highs and lows both increase significantly at the same time, combined with weakening market breadth, it often reveals a dangerous internal divergence—a few strong stocks support the index, while a large number of stocks have quietly collapsed. This structural divergence usually precedes major adjustments, especially when market style is highly concentrated in a few sectors like AI and tech stocks, where signals of liquidity stratification and expectation divergence are clearer.

The signal requires four conditions to be met simultaneously to trigger: the Dow Jones Industrial Average's 10-week moving average is trending upward, ensuring the overall market is in a bull market; the proportion of NYSE stocks at 52-week highs and lows both exceed 2.2% of total listed stocks, reflecting extreme divergence; the number of stocks making new highs does not exceed twice the number making new lows, indicating the upward trend is unhealthy; and the McClellan Oscillator is negative on the day, showing short-term market breadth momentum has weakened. If the above four conditions are repeatedly met within 36 trading days, it constitutes an "effective signal cluster," significantly upgrading the warning intensity.

Historical Review: 67% Probability of Predicting Nasdaq Correction Over 10%, False Alarms Also Exist

Zheshang Securities traces approximately 20 Hindenburg Omen trigger events since 1985. After the signal is triggered, the probability of the Nasdaq falling and cumulative drawdown exceeding 10% within 40 trading days is 67%, and the probability of evolving into a large-scale systemic decline is 33%.

Looking at historical cases, the indicator has provided warnings before several major market crises. Before "Black Monday" in 1987, the signal was triggered intensively 4 times, with the Dow subsequently plunging 22.6% in a single day and the S&P 500 experiencing a maximum drawdown of about 33%. At the peak of the tech bubble from October 1999 to March 2000, the signal cluster was triggered 6 times, with the Nasdaq subsequently falling over 78%. Before the subprime crisis in June to August 2007, the signal was triggered 5 times in 3 months, with the S&P 500 subsequently falling 57%. Before the COVID-19 shock in February 2020, the signal was triggered 8 times, with the Nasdaq's maximum drawdown exceeding 32%. From November 2021 to January 2022, the signal was triggered 7 times, with the Nasdaq subsequently retracing about 38%.

However, the indicator also has obvious limitations. After the signal was triggered in July to August 2010, U.S. stocks rose nearly 20% instead of falling, supported by expectations of Fed quantitative easing. In 2013, the most intensive cluster of 10 triggers in history also ended as a false alarm. Zheshang Securities points out that when market liquidity is abnormally abundant, the signal's timing may significantly lead the actual adjustment or even become completely ineffective—this indicates that the Hindenburg Omen is more suitable for judging the vulnerability of "valuation plus position" structures, while liquidity can temporarily mask this vulnerability. Therefore, this indicator is a necessary but not sufficient condition for a systemic market adjustment. It can be used to increase defensive positions, but it is not a clear, direct trading signal.

A-share Verification: 12 Triggers, 92% Effective Rate

Zheshang Securities adapted the Hindenburg Omen framework to the A-share market, back-testing 12 trigger points of the Shanghai Composite Index between 2000 and 2024. The predictive effective probability for medium-sized drawdowns reached 92%, indicating overall guiding significance.

Several key market turning points were accurately captured: From August to October 2007, amid accelerated retail investor entry and fund overheating, the signal was triggered 6 times, with the Shanghai Composite Index subsequently peaking on October 16 of the same year. During the leveraged bull market climax in May to June 2015, the signal was triggered 8 times, with A-shares subsequently falling sharply under the impact of deleveraging. Before the Sino-US trade friction in January to February 2018, the signal was triggered 3 times, followed by a significant market drawdown. Before the collapse of core asset concentration in January to February 2021, the signal was triggered 4 times, with the CSI 300 subsequently experiencing a large drawdown.

However, the signal also has limitations in A-shares. After the signal was triggered in April 2019 and May 2007, the market only experienced medium-sized drawdowns rather than the end of a systemic bull market, indicating that this indicator's prediction of trend reversal is a necessary but not sufficient condition. Zheshang Securities also cautions that the historical back-test sample size is relatively small, and the robustness of the statistical conclusions needs further verification, so over-extrapolation is not advisable.

Current Assessment: U.S. Stocks Triggered, A-shares Not Yet Strictly Triggered

According to Zheshang Securities data, as of June 24, 2026, all four trigger conditions of the Hindenburg Omen in U.S. stocks have been met: the Dow and NYSE are above their 50-day moving averages; the number of NYSE stocks hitting new highs and lows both exceed the 2.2% threshold, and the number of new highs does not exceed twice the number of new lows, indicating an unhealthy upward trend; the McClellan Oscillator has been in negative territory multiple times between April and June. Since the start of 2026, the signal has been triggered more than 10 times, with 7 triggers in the past month.

From a position structure perspective, as of mid-June 2026, the information technology and communication services sectors together account for 47% of the S&P 500's total market capitalization. This high concentration makes the index highly susceptible to fluctuations in a few stocks. However, Zheshang Securities also points out that these two sectors contribute 44% to S&P 500 earnings; as of June 24, 2026, the Philadelphia Semiconductor Index's P/E ratio is 46 times, which is not extremely overvalued. From an earnings perspective, the current bubble in U.S. stocks is not as severe as during the 2000 tech bubble, and the probability of continued U.S. stock prosperity driven by the AI industry is relatively high. The institution emphasizes that the current Hindenburg Omen indicates an increasing probability of a systemic adjustment within the next quarter. Investors can moderately increase defensive positions based on this, but it should not be taken as an immediate sell signal.

For A-shares, the first three conditions of the Hindenburg Omen are basically met, but the McClellan indicator signal is still unclear, and a strict trigger has not yet occurred. Zheshang Securities expects that due to the linkage effect of U.S. stock volatility, A-shares may experience increased short-term volatility; in the medium term, the institution maintains its judgment of a systematic "slow bull" moving steadily forward for A-shares.

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