Is the market preparing for major descent?

As I review through the index components of STI, I noticed that most of the counters had been experiencing corrections of about 20% over the last 3-4 months. Most of them are now trading below the 200-period moving average. Comparing this scenario with end of 2007, I am trying to figure out whether there is any sign of break down.

In 2007, the run up to the crash was a super bull run from 2004 and punctuated by 2006 correction and 2007 correction. The last leg was extremely strong followed by rapid correction then crashes.

There are 3 pairs of patterns where prices move below 200-period moving average during bull run. I call them pattern 1, 2 and 3 (see picture). Pattern 1 was a false warning. It resulted in super bull run in 2006/2007. Pattern 2 was the real warning. It resulted in 2008 crash. The million dollar question is whether this pattern is real warning?

A check on each of the component stocks reveals that majority of them (about 25/30) are trading below 200-period moving average now. Some of the started the down trend 6 months ago while other 3 months ago. For those stocks that are still sitting on top of the 200-period moving average, they are on the down trend also. How long this down trend will persist is anyone's guess. If the current situation persists, this may result in a slow grind to the bottom.

In essence, the major trend of the market has actually turn negative and has persisted for more than 3 months. The major macroeconomic factor seem to support such trend. If the macroeconomic factors persists for another 3 months, the trend should be confirm and we should expect further down side.