The Bear Market Ended Months Ago, Says Master of Turning Points | Milton Berg

Episode Summary

Executive Summary: Milton Berg argues that markets are best understood through turning-point analysis, not trend-following. He says the June 2022 low was the true major bottom, with October and December acting as tests, and points to a broad set of unusual breadth and volume signals as evidence that stocks are in a new bull phase despite recession fears. He is bullish on China, U.S. equities, and gold miners, but negative on bonds.

Main Topics: Turning-point technical analysis (Priority: 5/5): Berg explains that his framework seeks to identify major market lows and highs within days, using unconventional indicators rather than moving averages or standard trend tools. Why June 2022 was the major low (Priority: 5/5): He argues the market bottomed on June 16, 2022, coinciding with the Fed's first 75 bps hike, and that later lows in September/October were merely tests within a broader base. Breadth, volume, and panic/reversal signals (Priority: 5/5): Berg cites TRIN extremes, upside/downside volume ratios, and breadth thrusts as evidence of panic exhaustion and reversal, especially around October 2022 and January 2023. Bullish case for China and global equities (Priority: 4/5): He says China was bought exactly on a cycle low and remains constructive on U.S., European, and Japanese equities, arguing liquidity and policy support outweigh recession fears. Recession, liquidity, and macro interpretation (Priority: 4/5): Berg believes the U.S. already had a recession in 2022 and that markets often bottom before economic data turns. He emphasizes residual global liquidity from years of stimulus. Gold miners versus stocks (Priority: 3/5): He is bullish on gold and especially GDX, arguing miners are highly volatile but can rally strongly when equities and liquidity conditions improve. Bearish view on bonds (Priority: 4/5): Berg expects bonds to remain weak long term due to debt overhang, inflation/deflation risks, and the possibility that governments must either inflate away or default on debt.

Key Arguments: His process is built to detect market turning points, not follow trends; he prefers signals that appear within days of a low or top. The June 16, 2022 Fed hike coincided with the true major market low because the S&P 500 and Russell 2000 held above that level through later retests. TRIN above 4, extreme upside volume, and rare breadth thrusts are historical panic/reversal signals that typically occur at major lows. The October 2022 and January 2023 breadth/volume patterns imply the market has already begun a new bull phase. He believes recession concerns are already priced in or already occurred, making future recession fears a poor basis for staying out of stocks. Global central-bank liquidity from the 2008-2020 era has not fully drained, helping explain resilient equity markets outside the U.S. as well. China is attractive because policymakers want markets higher and the index had already fallen enough to present a turning-point opportunity. Gold miners are bullish but structurally difficult businesses; still, GDX is viewed as early in a new bull move. Bonds are negative long term because debt expansion and inflation/deflation dynamics may erode real returns or lead to default/inflationary dilution.

Data Points: MCHI trade timing: Bought on the exact day of the low (October 24, 2022) - Berg used this as an example of his cycle-based turning-point process in China. MCHI return since entry: Up more than 50% - He cited the China ETF as evidence the low was correctly identified. China decline from peak: 61% - He said the scale of the selloff supported a bullish turning-point view. S&P 500 five-day momentum at major lows: At least 7.4% historically - Berg said major lows typically see this type of short-term surge within days. Best recent low rally: 6.4% off the June lows - He noted this fell short of the historical 7.4% threshold. June 16, 2022: Exact day of the market low and first 75 bps Fed hike - He identified this as the true major low. June-to-August rally: S&P 500 gained 18.93% intraday low to intraday high - He framed this as the first rally in the new bull move. Low validation threshold: 3.75% - Berg’s definition for a test of a prior market low. October 12 low relative to June low: Within 3% - He argued September/October lows were tests, not new major lows. TRIN threshold: Above 4 - He said this occurred on October 3, 2022 and historically signaled panic near lows. TRIN historical frequency: 10 prior instances - He said TRIN above 4 had only occurred 10 times before in his historical sample. TRIN forward median gain: 21.84% - Median maximum gain within 12 months after TRIN above 4. Upside volume ratio: 293 to 1 - October 4, 2022 upside volume versus downside volume; described as a rare reversal signal. Upside volume threshold sample: 100 to 1 - He said this level occurred four times historically and was strongly bullish. Upside volume forward median gain: 30.45% - Median maximum 12-month gain after 100:1 upside volume events. Breadth thrust date: October 28, 2022 - He said this was the first breadth buy signal after the autumn lows. Breadth thrust ratio: 2.04 to 1 - 10-day advances vs declines, a classic breadth-thrust style signal. Breadth thrust historical sample: 37 prior signals - He cited the historical record supporting bullish follow-through. Breadth thrust median gain: 20.16% - Median maximum gain over the next 12 months after such signals. NASDAQ breadth signal: 1.70 to 1 on January 12, 2023 - He said NASDAQ 10-day advances exceeded declines strongly and signaled bullish breadth. NYSE breadth signal: 1.9 to 1 on January 12, 2023 - He said this confirmed broad market strength. S&P 500 2023 target: 4650 - Berg said his official projection for 2023 was 4650. Projected upside: About 30% off the October lows - He linked this to the median return of his buy-signals. NASDAQ decline: About 35% - He used this to argue a bear market had already largely played out. Semiconductor decline: Over 45% - Presented as evidence of severe prior damage in speculative growth sectors. Russell 2000 decline: About 36% - Used to support the argument that much of the bear market was already priced in. ARKK decline: About 80% - He cited this as evidence speculative excess had already been unwound. GDX decline into September: About 46% - He said gold miners had already been washed out before reversing sharply. GDX position size: 10% to 12% - He described his own portfolio positioning in gold miners. GDX relative valuation: Down 51% from 2011 peak - Used to justify long-term attractiveness despite volatility.

Pivotal Quotes: "We don't generally look at moving averages and moving average crossings. ... We try to catch turning points." — Milton Berg: Explaining his core investment framework and why it differs from conventional technical analysis. "The market bottomed in June. The panic to the downside took place into the June lows." — Milton Berg: His central thesis on the true major low in the 2022 bear market. "Right now, we've been saying the market bottoms in June ... we have so many buy signals, but there's no reason to be, at this point, to worry that the market is going to decline." — Milton Berg: Summarizing his current bullish stance on equities.

Implications: Listeners should understand Berg is a deeply contrarian technical analyst who sees the post-2022 setup as bullish despite recession chatter. His approach implies investors should focus on rare market internals, not headlines, and be cautious on bonds while constructive on equities, China, and gold miners.