The Stock Market Is Doing Something Observed Only 3 Times in 155 Years — 1999, 2022, and 2026 — and It Offers a Dire Warning for Wall Street
Sean Williams, The Motley Fool
Sun, July 19, 2026 at 4:26 PM GMT+5:30
7 min read
Despite the stock market’s roller-coaster ride in March, 2026 is shaping up as another banner year for equities. Since early June, the time-tested Dow Jones Industrial Average (DJINDICES: ^DJI), benchmark S&P 500 (SNPINDEX: ^GSPC), and technology-driven Nasdaq Composite (NASDAQINDEX: ^IXIC) have soared to all-time highs
Investors don’t have to dig too deeply to uncover the catalysts behind Wall Street’s monster rally. In no particular order, the stock market’s primary drivers include:
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
The evolution of artificial intelligence (AI)
Record S&P 500 share buybacks (in 2025)
Better-than-expected corporate earnings
Initial public offering euphoria, spurred by Space Exploration Technologies (SpaceX)
While history conclusively shows that Wall Street’s major stock indexes have risen in value over multiple decades, the short-term outlook for equities isn’t nearly as rosy. We’re currently observing the stock market do something that’s only occurred three times over the last 155 years, and this event has historically coincided with a significant sentiment shift on Wall Street
The stock market is making dubious history
To be upfront, there are always historical headwinds threatening to drag down equities. For example, outstanding margin debt has gone parabolic for the fourth time since the start of 1999. When risk-taking ramps up, it’s historically spelled trouble for the Dow, S&P 500, and Nasdaq Composite
But it’s not outstanding margin debt that has a dire warning for Wall Street. Rather, it’s stock valuations that should concern investors
Value is an inherently tricky subject to tackle, given that there’s no blueprint for evaluating and valuing public businesses or the broader market. What one investor finds pricey may be viewed as a bargain to another
When valuing public companies, most investors rely on the traditional price-to-earnings (P/E) ratio. The P/E ratio is arrived at by dividing a company’s share price by its trailing 12-month earnings per share (EPS). Generally, the lower the P/E ratio, the more fundamentally attractive the company in question
However, the P/E ratio isn’t without its flaws. In particular, if EPS turns negative during a recession, the P/E ratio is no longer useful. This is where the S&P 500’s Shiller P/E Ratio comes in handy. You’ll also see the Shiller P/E referred to as the Cyclically Adjusted P/E Ratio (CAPE Ratio)
