U.S. stocks are providing signals that were also seen before major declines in the past four decades, said John Hussman, president of Hussman Investment Trust.

The star fund manager said investor complacency and expensive valuations are bad enough while the S&P 500 index is within 3 percent of its record high. The market’s dependence on a dwindling number of stocks is even more alarming, he said.

“When investors are risk-seeking, they tend to be risk-seeking in everything,” Hussman said in a July 27 market commentary. “When market internals begin to break down, it’s a signal that investor preferences have shifted toward risk-aversion. In that environment, previously benign overvaluation can quickly become disastrous.”

The S&P 500 has tripled in value since bottoming in 2009 when the U.S. struggled through the worst economic contraction since the Great Depression. As business activity recovered and the Federal Reserve kept interest rates at record lows, the index rebounded to a record close of 2,130.82 on May 21. It has fallen about 3 percent since then.

The problem with the market’s push into record territory is that fewer and fewer companies are participating in the rally, Hussman said. An important sign of risk-aversion among investors is evident in the lower percentage of stocks that are trading above their 200-day moving averages.

He cited the metric among the indicators that foreshadowed declines after peaks in 1972, 2000 and 2007:

1. Less than 27 percent of investment advisers polled by Investors Intelligence who say they are bearish.
2. Valuations measured by the Shiller price-to-earnings ratio are greater than 18 times.
3. Less than 60 percent of S&P 500 stocks above their 200-day moving averages.
4. Record high on a weekly closing basis.

“The most recent warning was the week ended July 17, 2015,” Hussman said. “It's often said that they don't ring a bell at the top, and that's true in many cycles. But it's interesting that the same ‘ding’ has been heard at the most extreme peaks among them.”

Meanwhile, the S&P 500 completed its third major week of earnings reports on July 24, with 56 percent of companies now reporting.

“Overall, 64 percent of companies have beaten on EPS, 50 percent on sales and 35 percent on both,” Savita Subramanian, head equity and quant strategist at Bank of America Merrill Lynch, said in a July 27 report. “While sales beats are still below average, the proportion of companies beating on both metrics is in-line with history and the proportion of EPS beats is well above average.”

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