That means
1) That you have analyzed the clip for stabilization.
2) The red wavy line means that that portion of the clip is so shaky that stabilization will not help - in other words, it would have to zoom in more than 50% to stop the shaking, leaving very little picture remaining.
It is best to choose selections for your project that do not have the red wavy lines. If you have a scene that has red wavy lines and you really need it, you can use it in your project, but turn stabilization off for that clip in the clip inspector.
Also, if you can, avoid choosing selections that include part red wavy and part not red wavy. This will make the whole selection where it cannot be stabilized. If you need a selection that spans both, bring them in in two parts - the good part, and the red wavy part. This way you can at least stabilize the good part.