As the benchmark S&P 500 trades at a new all-time high, an expert is warning that the gains might be ushering in a new period of downside momentum.

Specifically, Bloomberg Intelligence senior commodity strategist Mike McGlone has noted that U.S. stocks may be moving toward a period reminiscent of the 2008 financial crisis, he said in an X post on July 5.

His analysis is based on technical signals suggesting the S&P 500 is at risk of underperforming gold in the years ahead.

McGlone pointed to what he termed “Beta breaking down vs. gold” as evidence of a dangerous backdrop for equities. 

He drew parallels to the early 1970s, when the United States abandoned the gold standard, and to 2006, which marked the peak before the Great Recession-triggered crash.

The strategist’s outlook is supported by a Bloomberg Intelligence chart tracking the S&P 500 priced in ounces of gold, a measure of stocks’ performance relative to gold. Historically, sharp breakdowns in this ratio have preceded periods of economic turmoil.

Key signals include the 200-week moving average (MA) and Bollinger Bands (BB), which have narrowed to levels last seen in 1995, often a precursor to sharp moves. 

The ratio is trending downward, breaching its lower band, a bearish sign similar to patterns before the 1970s and 2008 crises. After peaking around 2000 and rebounding post-2008, the ratio now shows signs of topping out as momentum fades.

Stock market sustains bullish run 

Indeed, the stock market has made a notable recovery since the early April tariff dip, with the S&P 500 index reclaiming the 6,000 mark. At the close of the last market session, the index was up 0.8% to 6,279. Over the past week, the benchmark has rallied by more than 2%.

Despite this momentum, warnings have been issued about a possible economic downturn, with market players citing potential triggers such as the United States’ rising debt levels. The recently signed tax cut bill is expected to increase the debt burden further.

In this environment of uncertainty, investors have increasingly sought safe-haven commodities, with gold taking the lead.

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