Crediting an economic model from his colleague Andrew Lapthorne, a quantitative analyst at Societe Generale, Edwards states that "three fundamental" data points in his model show a worrisome probability that stocks have entered a downward trend.
These metrics include the 12-month percentage change for operating and profit margins for companies in the S&P 500. They also include the debt-asset ratios of these companies and the return on assets—how profitable a company is relative to its total assets.
"Mr. Market is telling us something that is not apparent in the economic data," Edwards said.
He added that there is a striking correlation between market momentum and the stocks with the best balance sheets, which he suggests is a bad omen and a "phenomena associated with equity bear markets."
"This becomes even more evident when we plug this data into one of our (bear market indicators), which now shows a 99.7 percent probability we are in a bear market," he said.
Edwards is known for his markedly pessimistic predictions, and regularly touts the idea of an economic "ice age" in which equities will collapse because of global deflationary pressures.
World stock markets have seen significant volatility this week. Major U.S. benchmarks fell into correction territory before rallying Wednesday and Thursday.
Growth concerns from China have been seen as a major reason behind the volatility as well as the stimulus from the People's Bank of China. Edwards now believes that the Asian nation is acting like a fully "paid up member of the international financial community."
He predicted that China will soon be "replicating the failed U.S. policies of ramping up the equity market to boost economic growth."
While his bearish thoughts and predictions are widely read by colleagues and rivals at fellow banking organizations, they do not always come true. In September 2012, he announced the U.S. was in recession and Wall Street would soon react, and warned of an "ultimate" death cross for the S&P 500—where the 50-day moving average falls below the 200-day trend line.
Instead the S&P 500 continued to rally, and has gained around 35 percent since Edwards' pronouncement.