Resolution criteria

A stock market crash is defined as a drop of 20% or more from a recent high. This market resolves YES if the S&P 500 declines 20% or more from its most recent peak before January 31, 2026. Resolution will be determined by checking the S&P 500 closing price on https://fred.stlouisfed.org/series/SP500 or https://www.marketwatch.com/investing/index/spx.

Background

The S&P 500 was at 6,966 points on January 9, 2026, near all-time highs. The index ended 2025 at 6,845.5 points. A 20% decline from current levels would require the index to fall below approximately 5,476 points within the next three weeks.

Wall Street forecasts reviewed by CNN show a wide range of targets from strategists, though all estimate positive gains for 2026. Ed Yardeni of Yardeni Research notes that while the probability of a market correction triggered by recession fears remains low at 20 percent, the risk isn't zero.

Considerations

The CAPE ratio has been hovering in the 39-40 range recently and closed 2025 slightly above 40, which is only the second time in market history that this valuation gauge has surpassed 40. When the Shiller P/E runs near this level, it has typically been followed by a sharp reversal, though the timing of that reversal has varied widely. Uncertainty about Trump's pick for Federal Reserve Chair as well as persistent geopolitical tensions and tariffs could create headwinds for stocks.