Earnings season kicked off last week, with Alcoa leading off by reporting disappointing results last Tuesday.

Q3 Earnings for S&P 500 companies are expected to drop 2.1%, according to FactSet. As my colleague Jared Levy recently noted, this would mark the sixth consecutive quarter of year-over-year declines.

#-ad_banner-#Sounds troubling, right? Add that to the ongoing list: The Federal Reserve’s dithering on whether or not to raise rates… stagnant GDP growth… tepid jobs numbers… a slowing Chinese economy… Brexit… a looming U.S. Presidential election… it just keeps piling up.

Hopefully none of what I’ve said up to this point has you panicked. That’s not my intention. But if all of this gloom and doom (and uncertainty) has you feeling nervous for how this will affect your portfolio, remember that there’s nothing new under the sun. In fact, we can turn to history as a guide.

For starters, here’s a piece of information that should come as no surprise to anyone who’s been paying attention… the stock market is increasingly looking overvalued. With a price-to-earnings ratio of about 25, the S&P 500 is on the upper end of its historical valuation. Since 1900, the S&P 500 usually peaks at a valuation in the low to mid-20s.

Now, could stocks continue to rise and become even more expensive? Sure. But if history is any guide, we’re likely on the tail end of the current bull market.

For a more technical perspective on that view, I’d like to turn to my colleague Amber Hestla, Options & Income Strategist for Income Trader.

While she believes there’s still money to be made with her simple options technique, where she and her followers use put options to trade for income, she is taking a cautious approach to the overall market and being very selective with her trades.

Here’s more from Amber:

“Over the weekend, I was reading through a collection of Charles Dow’s original editorials from The Wall Street Journal, which sparked some ideas for this week’s trade.

Dow is probably best known for the averages he created, including the Dow Jones Industrial Average. Among market students he is also well known for what is now called Dow Theory, a simple trend-following strategy that can help traders stay on the right side of the market. The theory was explained in editorials Dow wrote, mostly from 1899 to 1902 in his newspaper. After Dow’s death in 1902, admirers of his work built on his columns to develop a comprehensive theory of market action.

In reading some of Dow’s writings, I was struck by something he wrote that seems obvious but needs to be explained to many investors. In a January 1902 article, he wrote, “It is a bull period as long as the average of one high point exceeds that of the previous high points. It is a bear period when the low point becomes lower than the previous low points.” That’s about as simple as market analysis gets. When prices are rising, it’s a bull market, and when prices are falling, it’s a bear market.

Dow’s immediate successor at The Wall Street Journal, William Hamilton, presented the full theory in his 1922 book, “The Stock Market Barometer.” Hamilton noted there are times when markets are neither bullish nor bearish and called these periods “lines.” Today, we often call a line a “trading range.”

As I read about the markets, my goal is to apply what I learn to the current market environment. The concept of trends and lines is easy to apply. A monthly chart of the SPDR Dow Jones Industrial Average ETF (NYSE: DIA), shown below, indicates we are experiencing a line after a clear uptrend from 2009 into 2014.”

“The series of higher highs and higher lows that began in 2009 was broken in August 2015 when a brief panic sent indices sharply lower. Since then, prices have formed a line. Hamilton explained that a line could take the place of a bear market and serve as the setup for a new bull market. Or, prices can move lower after a line is completed, indicating a new bear market is underway.

Despite amazing advances in technology that have occurred in the 114 years since Dow’s death, we still need to wait for the price action to tell us which way the next trend will be. It can be frustrating to wait, but studies have demonstrated that following Dow’s theory can be profitable in the long run.”

As I mentioned earlier, just because Amber is cautious about the market right now doesn’t mean she and her followers aren’t making profitable trades. In fact, the simple strategy Amber uses in Income Trader, her premium newsletter, is designed to work in just about any environment. It’s for that very reason she’s been able to post an astonishing 96% win-rate on her trades since 2013.

So if you’d like to learn more about her service and how you could be earning hundreds or even thousands of dollars in income with each and every trade, I invite you to watch this video. It’s only eight minutes long, but you’ll need to act fast because the video will be taken down soon.