Milton Berg: “Overwhelming” Evidence of Bullish Action In Stock Market

Episode Summary

Executive Summary: Milton Berg argues the April 2024 market selloff and rebound marked a major bullish turning point, citing repeated high-volume, breadth-thrust, and capitulation-style signals across equities. He says the evidence supports owning stocks despite tariff fears and bears’ recession talk. He is bullish on U.S. equities short term, cautious on gold, skeptical on Bitcoin, and selective on China.

Main Topics: April 2024 market bottom and bullish turning point (Priority: 5/5): Berg says the market low around April 8–9 was a historic turning point, with multiple technical signals showing capitulation and strong follow-through potential. Technical breadth and volume signals (Priority: 5/5): He repeatedly emphasizes that upside volume, breadth thrusts, TRIN, and multi-day holding patterns are the real evidence behind his bullish view, not price alone. Tariffs and fundamentals as secondary to market action (Priority: 4/5): Berg argues tariffs may ultimately be positive by forcing fairer trade and domestic production, but insists his actual market calls are driven by technicals, not politics or macro views. Risk of late-stage bull market vs. new bull leg (Priority: 4/5): While highly bullish, he acknowledges the rally could resemble a 1987-style blow-off rather than a multi-year secular advance, with 6–9 months of upside still plausible. Gold and Bitcoin views (Priority: 3/5): He is bearish on gold, arguing it is overvalued relative to inflation and showing topping momentum, and dismissive of Bitcoin as fundamentally nonsensical despite its trading value. International markets and China (Priority: 3/5): He sees China as technically attractive and already owns names like Alibaba and Futu, while remaining less convinced on Europe because it has tended to follow U.S. equity cycles.

Key Arguments: The April 8–9 selloff was not a normal correction but a significant bear-market-style decline in several indices, setting up a strong reversal. Extreme upside volume, breadth thrusts, and rare TRIN readings around April 9 historically occurred near major lows and were followed by substantial gains. Multiple independent signals clustered around the low, which Berg says is far more important than any one indicator alone. Berg claims the market does not look like a bear-market rally because bearish sentiment remains elevated and retail investors are not showing the kind of euphoric bullishness that typically marks a major top. He believes tariffs could be constructive if they reduce foreign trade barriers and spur domestic manufacturing, even though this is not the basis of his trading view. He is not relying on fundamentals to trade: his technical model would remain bullish even if he disliked the policy backdrop. Gold looks stretched to him because it has outrun inflation and is exhibiting commodity-style topping momentum. Bitcoin is not an area where he has conviction; he aligns with Buffett/Munger skepticism. China appears technically favorable to him and is already a portfolio area of exposure. He warns that the market could still experience a 1987-like blow-off top rather than a long multi-year advance, but says the near-term direction is clearly higher.

Data Points: Russell 2000 decline: -27.92% - From Nov. 5, 2021 to the April 8 low, as cited to argue a major bear market had already occurred in small caps. Russell 2000 inflation-adjusted decline: about -40% - Berg’s inflation-adjusted framing of the multi-year Russell weakness. NASDAQ composite change: -4.92% - From Nov. 19, 2021 to April 18, described as a four-year market that went nowhere. S&P 500 change at April 8 low: +3.88% from Jan. 2022 high - Used to argue the S&P had barely risen over four years and was effectively flat in real terms. S&P 500 drop into April low: -18% - The short-term selloff that Berg views as a bear-market-style move. NASDAQ drop into April low: -24% - Part of the evidence that the market had already suffered a meaningful decline. Russell decline over prior four years: nearly -30% - Another sign that a major bear market had already taken place in some indices. April 9 NYSE breadth: 6:1 upside-to-downside issues - Cited as evidence of unusually strong internal market action on the reversal day. April 9 NYSE five-day volume: highest in 375 days - A key volume thrust signal associated with past major lows. April 9 S&P upside/downside volume: 90:1 - One of Berg’s strongest turning-point indicators when combined with the S&P being below its 250-day average. TRIN on April 9: 0.17 - Presented as an exceptionally rare, historically bullish thrust reading. Historical median gain after one signal cluster: 24.63% - Median max gain within 12 months after a strong volume/thrust setup seen around April 9. Number of prior instances for one setup: 5 times - The S&P below its 250-day moving average plus 90:1 upside/downside volume. Historical median gain after another signal cluster: 30% - Median maximum 12-month gain after a TRIN thrust / high upside-volume setup. April 30 recovery behavior: S&P up 9% off its last 10% decline to a new recovery high - Used as part of a three-part bullish continuation signal. April 25 multi-day behavior: NASDAQ up at least 1.25% for four days in a row - A rare post-correction pattern that Berg says historically favored higher prices. May 5 regime of high volume signal: 10 historical precedents - A breadth-thrust signal within a high-volume regime, which Berg says is bullish. Gold peak reference: $850/oz in 1980 - Used to compare today’s gold valuation versus inflation over time. Gold trough reference: around $240–$250/oz in 2000 - Shows the long decline after the 1980 peak. Gold value relative to inflation: more overvalued than at the 1980 peak - Berg’s core reason for being bearish on gold. China portfolio exposure: about 15% to 20% - Berg says his long-only portfolio has meaningful exposure to China through selected stocks.

Pivotal Quotes: "The fact that there's so few bulls out there and so many bears just tells me that most people aren't doing the kind of work that I do, which just gives me an edge." — Milton Berg: Opening bullish framing of the market and his contrarian use of data. "Why argue with facts? This is the data." — Milton Berg: His defense of the April 9 thrust signals and historical precedent approach. "I still buy pullbacks. I still think we're in a bull market. I still think these will look very great for the stock market." — Milton Berg: His response after discussing potential bearish signals on May 12.

Implications: Listeners should take away that Berg sees the post-April selloff as a major buying opportunity, not a recession warning. His framework favors staying long equities while watching for later-cycle top signals, and it argues against chasing bearish macro narratives too early.