This metric set to trigger massive S&P 500 crash, expert warns

• The S&P 500 has not retested its 200-week moving average since October 2022, a pattern historically associated with overheated, late-stage bull markets that typically precedes major corrections
• The M2 Global Liquidity Index is projected to peak around February 23, 2026, following a four-year cycle that has historically aligned with major market tops
• The S&P 500 earnings yield has fallen to approximately 3%, near century lows last seen during the late 1990s dot-com bubble, indicating stretched valuations with little room for disappointment

Summary

Key Warning Signals

A trading expert from TradingShot warns that the S&P 500 may be approaching a significant correction despite trading near record highs at 6,941 (down 0.33%). The three-year bull cycle that began in October 2022 is showing signs of exhaustion through multiple technical and valuation indicators.

Critical Metrics

Technical Analysis: The index has not retested its 200-week moving average since October 2022, historically signaling overheated late-stage bull market conditions. Since the 2009 financial crisis, major bear cycles have typically bottomed at this key level.

Liquidity Concerns: The M2 Global Liquidity Index is entering a cyclical peak zone, with liquidity historically peaking every four years and aligning with major market tops. The next projected peak falls around February 23, 2026.

Valuation Extremes: The S&P 500 earnings yield has fallen to approximately 3%, near century lows. This level was last breached during the late 1990s dot-com bubble, indicating stretched valuations with minimal room for disappointment.

Downside Target

If liquidity peaks and a bear cycle begins, the analysis suggests a potential retracement to the 200-week moving average near the 5,500 level from current levels around 6,941.

Market Implications

The combination of extended valuations, lack of technical correction to key support levels, and peaking liquidity indicators suggests elevated risk for equity investors. The low earnings yield means investors are accepting minimal returns for stock exposure, leaving markets vulnerable to earnings disappointments or economic weakness.