The Hindenburg Omen was named after the Hindenburg disaster, where an airship of the same name exploded in 1937. The Omen itself was introduced by legendary investor Jim Miekka and further developed by Saul Kupferberg during in 1980s.

The indicator works by analyzing the stock market and determining whether or not it is in a pattern of a potential crash. To do this, it watches for days when both the new 52-week highs and new 52-week lows exceed a predetermined reference percentage. If both numbers exceed the reference percentage, it's seen as a signal that the market is out of balance, and therefore at a greater risk of a crash.

The indicator can be used as an early warning sign of a stock market crash. It's not always correct, however, since stocks are constantly moving and any number of factors can cause a stock market crash. Therefore, most investors consider the Hindenburg Omen one tool among many to gauge the health of the stock market.

When the Hindenburg Omen is triggered, it is considered an important indicator to pay attention to. Some investors choose to liquidate their portfolios, while others continue to invest and wait to see what happens.

It's important to remember that the Hindenburg Omen does not always signal a crash. Its signal needs to be supplemented with other forms of technical analysis, such as charting, before a decision can be made. Additionally, it's important to factor in market fundamentals and news events, as they can also be leading indicators of market direction.

Overall, the Hindenburg Omen is an important tool for investors to consider when gauging the health of the stock market. Its signal needs to be factored with other forms of analysis and market events in order to make an informed decision.