With all the talk about an AI bubble investors are looking for any clues they can scrounge together that a stock market pullback might be near. And the increasing audacity of data center spend, increasingly circular dealmaking, and vendor financing are only enhancing anxiety about the concentration around tech in today’s stock market.

Still, Wall Street analysts hold that the stock market has plenty of room to run, with large financial institutions forecasting more gains ahead. But when investors get a signal that things might be awry, they tend to perk up. And last Thursday and Friday, they got two, one after another.

The so-called Hindenburg Omen flashed twice to end October, portending a “serious decline within the next 40 days.” It was the indicator’s first appearance since Mar. 3, 2025, which was just days before the U.S. markets saw a significant decline in the fallout of President Donald Trump’s new ’emergency power’ tariffs.

The indicator is also said to have portended the the 1987 and 2008 stock market crash, making it a popular watch among ‘non-mainstream’ analysts. However, it’s not an exact science. While the oscillator aims to flag risk and discrepancies in the market, which sometimes lead to downturns, sometimes there is no downturn at all.

Still, the indicator could imply signs of trouble, especially given the criteria required to set off the alarm bells. Those four specific criteria include:

• The 10 Week Moving Average is rising;
• New highs and lows are greater than 2.2% of listings;
• The McClellan Oscillator is negative;
• New highs are less than or equal to twice the new lows;

In many cases, the market continued to soldier higher for at least three months before a correction. And in about quarter of cases did the market actually experience a significant decline, per an analysis from SubuTrade.com.

Still, given the increased concentration in tech names, the Hindenburg Omen might be a warning that things are going wrong under the hood. And by under the hood, we mean outside of the Nasdaq Composite and S&P 500, which rose 0.46% and 0.17% respectively on Monday. At the same time, 58.4% of all U.S. stocks saw a decline.

Worse, an even greater sum (61.2%, or 3,391 holdings) are below their 50 day Simple Moving Average (SMA). And based on the trend, over 49% of U.S. listings are already below their SMA200.

This strength at the top of the market contrasts with the rest of the market, a dichotomy which is increasingly obvious when you look at the shares of consumer-exposed stocks. The trend we’ve seen from some of these names was observed in the run-up to the burst of the dot com bubble.

Despite that, many analysts hold that this time might really be different, citing the strength and profitability of tech giants like Microsoft and Alphabet, who are huge players in the current AI boom.

There are detractors though, who caution that now is a time for worry. On Monday, celeb investors like Michael Burry (of “The Big Short” fame) even shorted Palantir and Nvidia, two popular AI stocks.

As with most things, we covered both of the AI argument in a piece from October, so you can make your own determination. But even if there is a Hindenburg Omen, the overwhelming conclusion is that equities do eventually rebound, which means it might not be necessarily cause to go sell your 401(k) or IRA.

For everyday Americans, it’s business as usual. But for more hands-on traders, the Omen might stand out in the wide array of warning signs flashing red in the market. Set a reminder on your calendar.