Do you want to be able to call a market top or a market bottom?

Well, I can't tell you exactly how to do that, but there are specific signs and economic data that can aid in making prudent investment decisions when a market turn is on the horizon. An under-the-radar, but highly correlated index has proved very useful in this regard over the past few years, and this correlation should only be enhanced as our global markets continue to become more intertwined.

What is this index?
As equity markets were pummeled in 2008 and early 2009, so too was the Baltic Dry Index (BDI). It measures the actual prices to ship raw materials such as metals, grains, cement, fertilizers, and fossil fuels by sea. In short, it indicates how strong the global economy is, as these materials are the foundation on which the world grows.

The BDI is priced every day by surveying shippers like DryShips (Nasdaq: DRYS) and Excel Maritime (NYSE: EXM) for the market price of shipping such goods. So unlike the stock market, this index won't be whipped around by high-frequency traders or newspaper headlines. The prices are driven by actual demand from the real buyers and sellers of the goods.

The bottom
In 2008, the Baltic Dry Index dropped an unprecedented 94% as global markets froze and demand for raw materials fell off a cliff. In May, the index reached nearly 11,800 points before imploding to 666 points in December. However, as our equity markets continued to drop into March of 2009, the BDI began its ascent, foreshadowing better times.

The top
Today, however, is a different story. The index recently peaked at a 2010 high of 4,209 on May 26 and has since lost about 40% of its value while the S&P 500 has remained essentially flat. The BDI has now declined for 22 straight trading days, even surpassing the Baltimore Orioles' 21-game record losing streak to begin the 1988 season.

So does this mean the market is about to suffer a 2008-style meltdown? No, but it certainly should make investors cautious about a global slowdown.

If the Baltic Dry Index bores you, try picking a basket of stocks to watch that trade based on these shipping prices that foretell global demand. Global commodity companies like copper producer Freeport McMoRan (NYSE: FCX) and fertilizer producer PotashCorp (NYSE: POT) are a good start; so are dry bulk shippers like Diana Shipping (NYSE: DSX) and Navios Maritime (NYSE: NM), which are responsible for making sure the resources reach their appointed destinations.

Do you think the Baltic Dry Index correction is forecasting further downside for the markets? What indicators do you use to measure global economic demand? Let's discuss in the comments box below.

Andrew Bond does not own shares in the any of the companies mentioned. Try any of our Foolish newsletters today, free for 30 days. The Fool has a disclosure policy.