Wow, does it feel like 2008. All of the standard correlations are acting like it is. Copper is falling out of bed, emerging markets are tanking, high yield bonds are testing 2009 lows - good lead indicators that are hinting or worse things ahead. I guess it's not a surprise because the market has looked like topping action all summer (actually, 2009 looked like a major until the Fed's QE2 provided a "rescue" for market participants). The most useful warning sign, in my opinion, is the US Dollar. After trading down in sync with falling stocks through late 2007 and the first half of 2008, it finally broke to the upside a month before Lehman. In similar fashion, after trading down (more sideways) though the summer topping action in US stock markets, the US Dollar has broken violently to the upside in recent weeks.
The chart below is a bit too much too digest, but if you can sift through all the intersecting lines, it shows the Dollar vs S&P correlation in 2008 and 2011 in a year-to-date overlap.
So what's the point? Danger Will Robinson! If you're heavily into stocks, my .02 suggestion to lighten up a little. Or a lot. Be in cash. Or short. But this is a time to be overly cautious, not to buy dips and seek "value", imho.