For much of the past year, the bulls have had every excuse to celebrate. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) closed at $757.09 on June 4, 2026, up 27% over the prior 12 months and 11% year to date, while the Invesco QQQ Trust (NYSEARCA:QQQ) has tacked on 40% over the same one-year stretch and 21% so far in 2026. Wall Street loves a clean uptrend, and right now the tape looks pristine. But beneath the surface, two old warning signals are flashing the same shade of yellow they flashed before previous 30%-plus drawdowns.

This comes from the most recent episode of the Retire SMART Podcast, where the host walked through what he is seeing on the charts he sends to his team. The first signal is the distance between price and the 200-day moving average, which he describes as “about a year, 200 trading days roughly in a year. So that’s 1-year trailing closing average.” When the index accelerates rapidly, it pulls further from that average, and the gravitational pull eventually wins. “Everything reverts to the mean,” he said. “It’s just math and physics.”

Signal One: Price Has Drifted Far From Its Long-Run Mean

The current setup qualifies as one of those moments. SPY closed at $757.09 against a long-run simple moving average of $523.61, a gap wide enough that even casual chart-watchers notice. The host is direct about what usually follows: “the last couple times this has happened, they were pretty severe corrections, right? So we’re talking over 30%.” History does not promise a repeat, but the pattern is consistent. Extreme deviations from the trailing one-year average preceded the dot-com unwind, the 2008 financial crisis, and the 2022 bear market, each of which carved 30% or more from the major indexes before the dust settled.

What makes the current stretch noteworthy is how quietly it has happened. The VIX sits at 16.06, in the lower quartile of its one-year range and well off the 31.05 peak it reached on March 27, 2026. Complacency, in other words, has fully returned after the spring stress period. Fear gauges this calm next to valuations this stretched is exactly the cocktail that has rattled investors in past cycles.

Signal Two: Leverage Is Doing the Heavy Lifting

The second warning is leverage. As the host put it, investors are “borrowing money from the brokerage house, basically, to buy more stock,” which amplifies both gains and potential losses. Margin balances tend to swell late in bull runs because rising collateral values let traders borrow more, and the feedback loop feels harmless until it does not. When mean reversion finally arrives, levered holders are the first sellers, and forced selling begets more forced selling.

The liquidity backdrop is consistent with that pattern. M2 money supply hit $22.80 trillion in April 2026, sitting in the 90.9th percentile of its historical distribution. Cheap, abundant money is the lubricant that lets margin balances climb. Meanwhile the 10-year Treasury yield closed at 4.49% on June 3, 2026, in the 95.6th percentile of its 12-month range, which raises the cost of every levered position and the discount rate behind every richly valued growth stock.

The market is paying premium prices for an economy whose consumers feel like it is already in recession.

What I Am Actually Doing About It

I have been investing through cycles for more than two decades, and I have learned that warning signals call for preparation, not exits. The market is hot, and hot calls for discipline. The host’s own message to his team was measured: “we just want people to be prepared and make sure you’re having some form of risk management or proactive management on your portfolio.” For his clients, the rule is even simpler. “We don’t use leverage,” he said, and that single discipline tends to be the difference between weathering a 30% drawdown and being wiped out by one.

My own portfolio remains deeply tilted toward the AI trade, which I believe is bigger than the internet was, even if the road there includes brutal corrections. The questions I am asking myself are small and specific. Is there roughly 5% of the book that has run too far and could be trimmed without triggering ugly taxes? Are any positions working only because of borrowed money? Am I confusing a great business with a great entry price? Those are the questions that keep you in the game.

Wall Street still heads higher in the decades to come. The Long Memory lesson here is to recognize when the math and physics of mean reversion are quietly building, refuse the temptation to chase with leverage, and make the small, sober adjustments now that protect you from having to make panicked, dramatic ones later.