With headwinds gathering strength, investors wonder when does the bear market start?

You have read about the economic mess in Europe. The anticipated inflation of the Eurozone economy turned out to be a no-show, and now the region is experiencing deflation. On January 7, Eurostat reported that the Eurozone’s annual inflation rate during the month of December was negative 0.2 percent. Because America relies on Europe to buy its exports, declining sales to European countries should have an impact on those closely-watched, quarterly earnings reports. Once the impact hits our exporters, the length of the slowdown could remain unknown, scaring investors away from those stocks.

The Swiss shocker on Thursday also casts a longer shadow on Europe as the European Central Bank prepares to meet on Thursday, January 22nd and that will be followed by Greek elections on the 25th.

One of the most significant developments hurting the European economy is the economic slowdown in China. As the world’s second-largest economy, China is a major importer of materials. The European mining sector is feeling the pain – as is that of Australia, one of China’s most important suppliers of raw materials.

Here in the United States, we are already seeing the impact of China’s slowdown on our own industries. Copper prices are in the basement and stocks for companies which produce copper are sinking. Cheap fuel prices are making it cheaper to produce the orange metal, causing a glut in the market.

Speaking of gluts and fuel prices, crude oil has become so cheap that it is actually bringing harm to the American economy. Although everyone initially welcomed lower prices at the pump, oil has fallen so low that it has created a contagious decline for other businesses.

Companies which manufacture the machinery used in oil extraction and refining are experiencing order cancellations. The railroad industry is making less money because oil shipments constitute a significant part of their business. Let’s not forget about the companies which produce tank cars.

The impact of lower oil prices is just one factor which could hurt America’s labor market. Lower demand for America’s exports could become another factor. Because the American economy is 70 percent consumer driven, renewed weakness caused by lower wages and layoffs could result in a drop in consumer spending, causing a significant ripple effect across our economy. In fact, the January 14 release of the December Retail Sales report from the Census Bureau brought some horrible news. The report indicated a 0.9 percent decline in retail sales for the month, which was lower than economists’ most pessimistic estimates, which only went as far as a 0.4 percent decline.

Japan ranks right behind China as a buyer of America’s exports. Despite all of the hype about Prime Minister Shinzo Abe’s “Abenomics” agenda, the flow of economic data from the country continues to disappoint. The latest report from Japan’s Cabinet Office revealed that one of the most important indicators of capital expenditures by the nation’s businesses – core machinery orders – increased by a mere 1.3 percent during the month of November, compared with 6.4 percent in October.  On a year-over-year basis, the decline was 14.6 percent.

While the United States has been enjoying a slow but steady economic recovery, a slowdown in the global economy could derail that progress. The January 14 release of the World Bank’s Global Economic Prospects report demonstrated that the situation is now ripe for the global economy to contaminate our own, with lasting consequences for the stock market.

Many indicators also put the U.S. market at overbought levels higher than at any time in history except for the dot com bubble.

So what does it all mean for U.S. investors?

The chart of the S&P 500 offers some important clues.

The index is currently near important support levels at recent swing lows, with 1975 being the most significant, followed by the 200 day moving average at 1966.  A break below these levels would be bearish on a longer term level.

VIX, the S&P 500 Volatility Index, has also been climbing and VIX futures are taking on a bearish term structure.

In the chart below, we can also see that the 20 day moving average is nearing a cross with the 50 day average, and this event would be seen as negative in the short term.

Fundamental factors combined with central bank action are generating a volatile brew for global investors. No one knows if or when a new bear market will start, and one of the key factors will be whether or not investors will keep their faith in the power of central banks to “watch their backs.” Should global conditions continue to weaken, we can continue to ask, “When will the bear market start?” and we might also want to ask, “How long will it last?”