Here in the UK, strategists are becoming increasingly worried about a possible slowdown. Chief contributors so far are a slowing housing market and slipping consumer confidence.

The Bank of England added to concern with its recent report that lenders are tightening up the amount of credit they will make available to borrowers in 2008. This stance increases the odds of a consumer led economic slowdown.

Indeed, several retailers recently reported disappointing sales, especially in big ticket items.

In America, a sub-prime lending crisis and a worsening real estate market continues to depress investors. Also, the Federal Reserve just admitted what Wall Street economists have been saying for months – that the housing crisis is worse than it had assumed and the US economy is in danger of slipping into recession.

The Federal Reserve's problem is an especially tricky one. Signs of inflation are beginning to appear. The Fed can reduce interest rates to help avoid a recession but such actions raise inflation prospects. In a nutshell, the Fed is caught between a rock and a hard place.

These economic issues help to explain why investors are worried about a bear market. Sad to say, various historically-linked stock market indicators offer more bad news. If the past is any guide, these indicators suggest the bull market of 2003-7 is over and UK shares are due for a solid thumping.

It might help if we put recent events into perspective. During the course of the last century, the average UK bull market ran for just two years before suffering a correction of at least 15 per cent. Seventeen of the last 18 took such a hit within 48 months.

But the 2003-7 bull market was more than four years old when shares last peaked in mid-June. In historical terms, it was a very long runner. Might shares continue to rise in the face of this powerful warning bell? Of course. Statistics like these are not precise market timing tools. Even so, this objective data warns that a solid decline is overdue.

We probably got a taste of the decline this past summer when shares fell in June, July and August. It is worth noting that summertime weakness as steady as in 2007 is a rare event.

Since the Second World War, there were just eight other years when the UK stock market declined in all three months. It is not common knowledge but a full-fledged bear market was underway in seven of those years.

A single exception occurred in 1992 when the UK economy was in a state of near-collapse after entering the Exchange Rate Mechanism (ERM) with an over-valued currency. Shares fell18 per cent in just three months after peaking in mid-May, 1992, just two percentage points shy of the traditional bear market definition.

Further falls were in the cards but we were (mercifully) ejected from the ERM which triggered a powerful rally. In retrospect, 1992 was probably the exception that proved the rule.

The recent bout of extremely high inter-day volatility is another important warning bell. There were eight periods since 1971 when shares rose or fell in excess of one per cent at least 20 times within 40 consecutive trading days. A full-fledged bear market was running in seven of those periods.

A single exception to the rule was the near-miss in 1977 when the stock market fell 17 per cent in inflation-adjusted terms. We are currently in the ninth round of extremely high volatility in modern times.

All of these signals carry a similar warning. A painful correction is due. So how bad will it be? History teaches the typical UK bear market slams shares by 25 per cent. But a more worrying trend appears once you ferret beneath the top-line numbers.

There is a solid link between the size of a bull market and the size of the decline that eventually follows. There were eight bull markets since the Great Depression when shares rose by at least 100 per cent. Prices fell by more than 25 per cent in each bear market that followed. Recall that shares rose by 105 per cent in 2003-7 (as of the mid-June peak) which makes this rally number nine in a long-running and worrying series.

Will this time be different? Will the all-important American market avoid recession? Did the Bank of England and Federal Reserve learn enough lessons from the past to influence future trends? No one can say with certainty.

My own view is that broad economic trends can be modified and perhaps even restrained by skilful management but not eliminated. Delaying strategies eventually run out of steam.

Recall the painful after-effects of excessively low interest rates in the run-up to Y2K. This is why I believe shares will decline in 2008.