Uh-Oh! One of the Most Bearish Stock Market Signals Just Triggered.

The bulls have been running wild on Wall Street since the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) bottomed during the financial crisis 17 years ago. With the exception of the five-week COVID-19 crash in February-March 2020 and the nine-month bear market in 2022, optimism has ruled the roost.

But over a century of history tells us that stock market cycles are normal, healthy, and inevitable. At some point, Wall Street's bull market run is going to give way to a bear market. Based on a recently highlighted signal from one of the stock market's leading optimists, the music may be stopping for the Dow, S&P 500, and Nasdaq Composite in the not-too-distant future.

Image source: Getty Images.

The benchmark S&P 500 just crossed the dreaded line in the sand

Before going any further, a word of caution about historical precedent and correlated events. While some data points and events have strongly correlated with significant short-term directional moves in one or more of the stock market's major indexes, nothing is guaranteed on Wall Street. If there were a forecasting tool that could guarantee the future, we'd all be using it.

With the above in mind, there is a forecasting tool that, for the last 76 years, has had a knack for predicting the S&P 500's annualized returns. What's even more amazing is that these returns are determined by a simple line in the sand: the 200-day moving average (MA).

The 200-day MA is a technical indicator (i.e., dependent on chart patterns rather than fundamental factors) that calculates the average closing price of a security over the previous 200 days. If a security remains above the 200-day MA, it's considered to be in a long-term uptrend. If it falls below this level, it's indicative of a downtrend.

After 214 trading days, the S&P 500 closed beneath it's 200-day MA this week.

Since 1950, when the S&P 500 closes above this trendline the annualized return is 21.1%.

When it closes beneath? -22.2%.

Proving once again that bad things tend to happen beneath this trendline. pic.twitter.com/HOYMj3i41w

-- Ryan Detrick, CMT (@RyanDetrick) March 20, 2026

According to Carson Group's Chief Market Strategist, Ryan Detrick, who's been among Wall Street's leading optimists, the benchmark S&P 500's 214-day streak of closing above its 200-day MA came to an end last week.

Since 1950, the S&P 500 has averaged an annualized return of 21.1% when it's remained above this trendline. Conversely, when Wall Street's health barometer has dipped below the 200-day MA, its annualized return plummets to -22.2%!

Widening the lens can alter your outlook

On the one hand, there's no denying that the S&P 500 falling below its 200-day MA is bad news. It also comes at a time when the stock market is exceptionally pricey, and the U.S. is experiencing the largest energy supply chain disruption in history.

But things can change in a big way if you widen your lens.

Although downturns in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite are inevitable, they're also short-lived. A recently released data set from Bespoke Investment Group on X (formerly Twitter) found the average S&P 500 bear market has lasted just 286 calendar days (about 9.5 months) since the start of the Great Depression (September 1929).

The current bull market -- the "AI Bull" -- has eclipsed the 1,200-day mark. This is the 10th bull market to last 1,000+ days based on the 20% rally/decline threshold.

Bear markets, on average, are much shorter, at just 286 days, with the longest being 630 days back in... pic.twitter.com/ds7lqWWHFh

-- Bespoke (@bespokeinvest) February 10, 2026

In comparison, the typical S&P 500 bull market has endured for 1,011 calendar days.

If your investing horizon is five or more years, bearish stock market indicators are nothing more than green flags to go shopping. Though you may not be able to forecast when stocks will bottom, more than a century of history conclusively shows that long-term optimists have the numbers on their side.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.