The Stock Market Is Flashing a Warning Signal Seen Only Once Before.
Here’s What History Says Comes Next
This year has been an interesting one for the stock market, to put it mildly. Major indexes just ended their best quarter in years, with the S&P 500 (SNPINDEX: ^GSPC), Nasdaq Composite (NASDAQINDEX: ^IXIC), and Dow Jones Industrial Average (DJINDICES: ^DJI) up by 14%, 19%, and 13%, respectively, since early April. At the same time, though, investors are growing pessimistic about the market’s future.
While around 31% of investors believe stock prices will rise in the next six months, according to a survey from the American Association of Individual Investors published on July 1, 42% believe the market will fall. The market’s short-term future will always be uncertain, but there’s one indicator creeping into territory seen only during the dot-com bubble of the early 2000s. Here’s what history says might be coming.