The equity bear market is not over, writes Albert Edwards, London-based strategist of Société Générale, in an article in the Financial Times.

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The valuation bear market began in 2000 and we have only seen two acts of a far longer and more disturbing play, says Edwards. Certainly when I see the current extremely low number of equity bears [the lowest as measured by Investors Intelligence since the market top of 2007], the likelihood is that the next leg of the long-term structural valuation bear market is closer than people realize.

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Source: The Big Picture, December 9, 2009.

Edwards highlights that, in terms of technical analysis, the S&P is stuck close to its 50 per cent retracement level from the October 2007 peak. In addition, key indicators such as the relative strength index have been weakening on poor volume throughout the second-half rally, suggesting a lack of strong technical underpinnings.

He also mentions that the topping out of some key US leading indicators may signal the top of the equity rally is close and concludes that markets will march to a very different drumbeat next year.