Market Warning: This 154-Year Indicator Just Flashed Red

The quick scan: Markets took a breather yesterday after Monday's 6,000 celebration, like that friend who needs a nap after their birthday party. The S&P 500 pulled back slightly from its milestone high, reminding everyone that what goes up sometimes needs a coffee break.

• S&P 500: Dipped 0.3% to close around 5,982, still flirting with the 6,000 level like a teenager testing curfew
• Dow Jones: Slipped 0.2% to 42,675, apparently deciding Monday's party was enough excitement for one week
• NASDAQ: Down 0.4% to 19,450, tech stocks taking a modest reality check

What's happening: Classic post-milestone consolidation—investors are catching their breath and deciding if this rally has real legs or if it's just another false start. Volume was lighter, suggesting many are sitting on the sidelines waiting for the next catalyst.

Bottom line: A small pullback after hitting 6,000 is perfectly normal—like needing to adjust your belt after a big meal. The real test is whether we can hold above 5,950 support or if we're heading for a bigger correction.

Rare Market Warning That's Been Right for 154 Years

The scoop: Here's something to make you spit out your morning coffee: the stock market is doing something it's only done three times in 154 years, and history suggests it doesn't end well.

The S&P 500's Shiller P/E ratio (a fancy way of measuring if stocks are stupidly expensive) is sitting at 36.52—more than double its historical average of 17.24. The only other times it got this high? Right before the dot-com crash in 1999 and just before the 2022 bear market.

Every single time the Shiller P/E has stayed above 30 for more than two months, the market eventually lost between 20% and 89% of its value. That's a perfect track record spanning over a century and a half—like a weather forecaster who's never been wrong about hurricanes.

Actionable takeaways:

• Don't panic, but don't ignore it: This indicator doesn't tell you when a crash will happen, just that one is likely coming eventually (could be months or years).

• Build your cash cushion now: Having 6-12 months of expenses saved means you won't be forced to sell investments at the worst possible time.

• Consider dollar-cost averaging: Instead of investing lump sums, spread purchases over time to smooth out the inevitable volatility.

• Review your risk tolerance: If a 20-50% portfolio drop would keep you awake at night, maybe dial back the stock allocation before it happens.

• Remember the flip side: Bull markets last 3.5 times longer than bear markets on average, so staying invested through the pain typically pays off handsomely.