Since much of the the Cunary is driven by China, a third indicator is the SSEC, the Shanghai composite. Emerging markets play a similar role to junk bonds in that they are a riskier place to invest and are sensitive to trend changes. Trendlines runs a series of posts on the SSEC and is worth checking out. Their current view is a drop in the SSEE to complete a triangle, then a thrust higher. We all remember how it bottomed first, in Nov2008, before our Mar2009 bottom, and led the way up. Its secondary top after the 2007 peak was back in August 2009. If it thrusts higher out of the triangle as Trendlines suggests, we might see it beat the Aug2009 high. The top after that could give a three or so month early warning of the top in the US.
ContrarianAdvisor, befitting its name, takes the opposite view: the SSEC has just broken below the 50 DMA and the lower trendline of a wedge, and is within a tenth of a percent of the lows for 2010. If we stay below the wedge, the SSEC would signal that it is now in the next leg down, and chirp a warning for US stocks. The potential fall suggested by this pattern is 30%.