Uncertainties over the U.S.-China trade war have captivated the market into year-end.
But another big market risk flying under the radar could cripple the bull market, said Lindsey Bell, an investment strategist at CFRA Research.
Corporate debt, she said, is building to untenable levels just as the Federal Reserve is looking to raise rates again.
"With over $9 trillion in corporate debt on the balance sheets out there, that's concerning," Bell said Tuesday on CNBC's "Trading Nation."
At the end of the second quarter, the corporate debt to GDP ratio moved above 45 percent, a "new cyclical high," Bell wrote in a recent note. In the past three cycles, it had not moved above that level.
Bell shares her concern with former Fed Chair Janet Yellen. In an appearance in New York on Monday, Yellen said that "high levels of corporate leverage could prolong" any downturn and lead to a string of bankruptcies across the corporate sector.
To avoid the pitfalls of corporate debt, Bell said more extensive research on a company's financial health is a necessity.
"What investors really need to do is make sure they're starting to look at balance sheets and cash flows. Look at those levels of debt and their ability to pay off the interest expense," she said.
Small-cap stocks, for example, are more highly leveraged than large-cap stocks. The Russell 2000, which holds 2,000 small caps, is 2.5 times more levered than the , said Bell. As the Fed raises rates and borrowing expenses climb alongside it, interest payments on corporate loans begin to rise, too.
Peak earnings growth could also become a major market headwind for stocks into 2019, Bell said.
"Right now the consensus estimate is for 7.5 percent earnings growth in 2019 which is a big slowdown from what we're seeing this year of 23 percent. We think we'll land in about 5 percent when it's all said and done," she said.
Looking into the new year, Bell said there could be value to be found in one of the most beaten-up groups of the market.
"We still like tech, for one, because we think that especially where the valuations are right now, they've come down significantly," Bell said. "Software and services is one area that we like. We think that once we get into 2019, semis might be an area that you can start picking again. That's clearly where we're keeping our focus."
The XLK technology ETF is down 10 percent over the past three months, but remains more than 4 percent higher for the year.
CFRA Research is also overweight utilities and energy.
