The S&P 500 Index and other major U.S. indices violated important support levels on November 19 suggesting the market is now poised to break its October 2002 lows. The S&P 500 Index is now down 45% in 2008 – its worst year since 1931.

Several high profile hedge funds and traditional equity fund managers turned bullish on stocks following the crash in October. Through yesterday, these advisors are sitting on losses exceeding 15% as stocks continue to swoon.

A long time bear, John Hussman of the Hussman Funds in the United States, turned bullish on stocks in late October pointing to a laundry list of contrarian indicators suggesting a major rally was in the cards.

Though stocks did indeed rally 18% off their late October lows, they subsequently plunged again starting on November 5. In November, the S&P 500 Index is down 15.8% following a 17% drubbing in October. Since September 1, the broader market has collapsed a cumulative 36%.

Here’s some compelling contrarian data that compelled Hussman and others to turn bullish in late October:

• Investment Advisor sentiment is now approaching record levels of bearish sentiment. This has historically served as a contrarian indicator for stocks;

• Mutual fund investors have been big net sellers of equity funds since July, also a contrarian reading since individuals harbor the worst sense of market-timing;

• The VIX or CBOE Volatility Index sits at 74.26 – a record. A VIX Index above 30 is extreme and at 74 continues to point to an absurdly oversold market;

• The Japanese yen at 96 is also overbought and historically suggests that we might be at a major turning point for stocks since the yen has already surged over the last 12 months as the infamous carry-trade unwinds;

• U.S. Treasury bills and T-bonds now yield their lowest rates in years. Thirty-day bills trade at just 0.12 basis points and benchmark ten-year Treasury’s yield 3.33% -- the lowest yield since June 2003. Near-record low yields for government bills and bonds points to a very oversold market as investors lunge after safety;

• Hedge funds are now poised to suffer their worst string of redemptions in history as the important December 31 redemption window approaches. A tide of investor redemptions in hedge funds, like mutual funds, also suggests that too many investors are running for the exits at the same time;

• The U.S. dollar is now a “safe haven” amid global chaos. The dollar is not a “safe haven” and instead is the beneficiary of global de-leveraging as investors sell global securities and convert these proceeds into dollars to meet redemptions or liquidity targets. The whole notion of the dollar is “King” is false with the United States effectively bankrupt and now embarking on the greatest expansion of credit in modern history to finance industry bailouts.

Obviously, Hussman and others like him who became bullish in October were too early. The Hussman Strategic Growth Fund has plunged 11% in November.

The stock market is now primed to violate its October 2002 lows. Until we flush all the sellers out, the primary trend remains down. Value investors or contrarians might be right eventually, but timing is indeed everything in the markets. Too bad the contrarians were early.