Bonds May Be Key Bear Market Tell

January 6, 2016 4:13pm NYSE:TBT NYSE:TLT

market bondsChris Ciovacco:  Since maximum fear in the financial markets tends to create demand for safer-haven bonds, the chart of long-term Treasuries (NYSEARCA: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.

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.

This article is brought to you courtesy of Chris Ciovacco from Ciovacco Capital.

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