"No warning can save people determined to grow suddently rich" - Lord Overstone

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Bonds May Be Key Bear Market Tell

Since maximum fear in the financial markets tends to create demand for safer-haven bonds, the chart of long-term Treasuries (TLT) should be helpful from a risk-assessment perspective. If stocks morph into a bear market in the coming days, weeks, and months, the odds are extremely high TLT will break above the upper blue trendline (toward the green arrow). As of 2:05 pm ET on Wednesday, January 6, TLT remains near a "possible resistance" zone.

TLT iShares Barclays 20+ Year Treasury Bond Fund NYSE + BATS

We also must respect the possibility of a Fed-induced 1994-like event, marked by a selloff in both stocks and bonds. Bonds are one of many relevant inputs.

 

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