August is showing red flags in the market, with the S&P 500 up 24% in the past four months. History suggests tightening risk management as post-election years typically see a peak in early August and weakness through September. Shiller PE ratio and Buffett Indicator show the market overvalued, with tech stocks defying economic logic.

August and September historically underperform in U.S. equities, with the warning signs extending beyond seasonality. Margin debt is surging, reminiscent of late-cycle signals in 1999 and 2007. Defensive positioning is increasing as traders bet on downside moves, indicating smart money may be quietly hedging.

Citi’s Levkovich Index and Barclays’ Equity Euphoria Indicator signal elevated levels preceding pullbacks. To prepare, use tools like the Put/Call Ratio, RSI, MACD Indicators, Seasonality Charts, and Valuation Multiples on Barchart. Combining technical signals with historical probabilities can help craft a risk management plan before volatility strikes.

Read more at Yahoo Finance: The Most Dangerous Month of the Year for VIX Spikes