Ominous signs crop up in American trading

Warnings from Wall Street are coming thick and fast as US stocks sit near all-time highs. The latest, from Sundial Capital Research Inc, points to a group of potentially bearish technical signals known as the ‘Hindenburg Omen’.

Deteriorating breadth in share gains and a jump in the number of individual stocks falling to 52-week lows has triggered a warning flag every day for over a week, Jason Goepfert, the firm’s president, said.

On both the New York Stock Exchange (NYSE) and Nasdaq, there have been eight of these technical patterns over the past six sessions, the biggest cluster since 2014 and the thirdlongest stretch in 50 years.

The indicator, named after the German zeppelin that caught fire and crashed in 1937, gauges indecision in the market and is designed to predict a decline within 40 days. References to the Hindenburg Omen in investment bank research still trigger discussions.

Goepfert says it’s rare to see this number of clusters so close together on both exchanges and, in the past, they preceded declines. The median two-month decline after similar clusters was 2.2 per cent, he calculated.