Podcast Summary
In this podcast, technical analyst Milton Berg discusses the current state of the stock market, focusing on data-driven turning points rather than chart analysis. He explores the significance of buy signals, the potential for a new bull market, and the unique momentum in the market since October. He also discusses the possibility of a market peak and the potential for a recession in late 2024.
Key Takeaways
Market Momentum and Buy Signals
- Buy Signals: Milton Berg emphasizes the importance of buy signals in predicting market trends. He mentions specific signals from January, October, and November 2023, some of which have already met their projections.
- Market Momentum: Berg highlights the unique momentum in the market since the October low, mentioning the strength and weakness seen in unweighted indices like the Russell 2000.
Potential Market Peak
- Market Peak Indicators: Berg suggests that the February 23rd peak in the S&P 500 may be the final bull market peak. He presents various indicators, including interest rates and Fed policy, that historically align with bull market peaks.
- Market Breadth: The host argues that market breadth, measured by the number of stocks at 52-week highs, is actually too strong for a bull market to continue, contrary to popular belief.
Speculation and Market Behavior
- Speculation in Good Companies: Berg notes that there is more sophisticated speculation in the market, with rational people managing institutional money participating in speculative activities. This is especially prevalent in good companies with strong balance sheets and earnings.
- Market Behavior: The current market behavior is different from previous bull markets, suggesting that this may not be a true bull market. The recent gains in the S&P 500 may be considered a blowoff top, similar to what was seen in 1929 and 1968.
Potential Recession and Deflation
- Potential Recession: Berg discusses the possibility of a recession in late 2024 and explains that the market being at an all-time high on a non-inflation adjusted basis may not necessarily be bullish.
- Deflation: Berg does not believe inflation is a risk and suggests that inflation will be tamed due to the high debt-to-GDP ratio. He suggests that the current GDP ratio indicates a potential problem of deflation by the end of next year.
Sentiment Analysis
- Bullish: Berg was bullish on the stock market in his first appearance on the podcast, even when most people were bearish. He also got aggressively long after the October low and saw his buy signals being met.
- Bearish: Despite his initial bullish stance, Berg acknowledges that a bear market is possible. He suggests that the February 23rd peak in the S&P 500 may be the final bull market peak. He also discusses the possibility of a recession in late 2024 and suggests that inflation will be tamed due to the high debt-to-GDP ratio.
- Neutral: While Berg discusses both bullish and bearish possibilities, he emphasizes that these are theoretical and speculative, and his view could change at any time. He also mentions that he is not heavily short at this point but plans to increase his exposure if he becomes more convinced that February 23rd was the final high.
