Is A Stealth Bear Market Already In Motion? | Seeking Alpha

Is A Stealth Bear Market Already In Motion? | Seeking Alpha



Chris Ciovacco has written another outstanding article about how to tell whether or not we are entering a bear market.  The solution is to monitor constantly what TLT (bonds) is doing compared to SPY (stocks).  You can look at this comparison TLT:SPY at www.stockcharts.com.  This chart shows the aggregate opinion of investors worldwide, and it is only when the wide opinion of investors turns bearish that we have to worry.



When the chart of TLT versus SPY turns up, it is time to buy bonds. When TLT versus SPY shows a downtrend, it is time to buy stocks. Chris gave a 2008 chart where TLT began turning up in July 2008 before the big stock market drop in the fall of 2008.  Then, conversely, he showed a 2009 chart where TLT broke its 50-day line and headed down in March of 2009.  This was the start of the current bull market which has lasted several years.  Currently, the general market is indecisive about stocks and bonds although the TLT chart 50-day line is sloping slightly upward.



Another point that Chris mentioned is that some sectors are clearly in downtrends compared to TLT.  These are tech stocks (QQQ), small cap stocks (IWM) and consumer discretionary companies (XLY).  Only the largest companies are holding up the stock market now.  Chris is maintaining a three-way mix between stocks (VTI), bonds (TLT), and cash.  No one can predict the future market direction.  We must be ready for anything.