The major indexes have been inching higher for months, but Stifel Nicolaus managing director Tom Schrader expects stocks will soon head lower.
The Dow and S&P 500 failed to close above key psychological levels breached earlier in Thursday's session.
"We've got a classic bull versus bear battle going at these high levels, and I wouldn't be surprised to see the market pullback between 8% and 10%," Schrader said.
The Dow Jones industrial average (INDU) ended up 4 points at 11,989.83, the highest since June 2008. With a gain of about 3 points, or 0.2%, the S&P 500 (SPX) ended just under 1,300.
Early Thursday, Standard & Poor's downgraded Japan's sovereign credit rating to AA- from AA, amid concerns of mounting debt.
Though the downgrade pressured the Japanese yen, other markets shrugged it off.
"With the predominance of China in the world economy, Japan doesn't get much attention," Schrader said. "It's still the world's third-largest economy, but I don't expect any spillover pressure in other markets."
Oil for March delivery was down $1.69 to settle at $85.64 a barrel.
Gold futures for February delivery slipped $14.50 to settle at $1,318.40 an ounce.
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