S&P 500 Just Broke a 18-Year Streak—What Happens Next?

The Setup

The S&P 500 hit 6,890.89 on Oct. 28, then dropped 5.1% within weeks. What’s the big deal? The index just fell below its 50-day moving average for the first time since April 30—ending a 198-day winning streak that was the longest since 2007.

That sounds dramatic, but here’s the thing: is it actually a warning sign, or just market noise?

The Historical Playbook

This streak ranks as the 5th longest since 1950. So we have solid data on what usually happens next.

Looking back at the three most recent similar streaks:

• Nov 2016 - Apr 2017: +162 days above the 50-day MA
• Aug 2017 - Feb 2018: extended streak
• Nov 2023 - Apr 2024: +162 days

The result? In the six months after each streak ended, the S&P 500 averaged +8% gains. Not exactly crash territory.

The only major exception was the 2007 streak, which preceded the financial crisis—but even then, the streak ended in February while the actual peak didn’t come until October. So it wasn’t an immediate signal.

The Real Warning Sign

Here’s where it gets uncomfortable: the CAPE ratio (Shiller P/E) just hit its second-highest level in history. The only time it was higher? Right before the dot-com bubble burst.

That’s worth paying attention to—not because it predicts a crash tomorrow, but because it tells you the margin of safety is razor-thin.

The Macro Headwinds

While the technical streak ending might not be bearish, the underlying economy is sending mixed signals:

• Job growth flatlined
• Consumer sentiment declining
• Discretionary spending weakening
• Auto loan delinquencies climbing

Meanwhile, the market got jittery over AI bubble concerns and recent tariff-related volatility.

Bottom Line for Your Portfolio

The 50-day MA breakbelow? Not necessarily a red flag. Historical precedent says the market often grinds higher in the months that follow.

But the CAPE ratio sitting at decade-high levels + weakening macro data = expect more volatility ahead. The risk/reward picture is less attractive than six months ago.

Investors shouldn’t panic, but they shouldn’t be complacent either. This is a time to look at valuations carefully and not assume the bull market runs on autopilot.