The Worst Panic in 4 Years Just Happened. Here's Why Milton Berg Is VERY BULLISH on Stocks

Berg expects the Federal Reserve will eventually need to raise rates and/or pursue quantitative tightening to control inflation, arguing that a major bear market typically follows actual tightening rather than anticipation of it. He says higher 10-year Treasury yields are not inherently negative for stocks unless they reflect tightening, liquidity squeezes, or bankruptcies.

Berg identifies leverage in private credit, commercial real estate, and margin debt as potential financial-system vulnerabilities, while emphasizing that he is not predicting an imminent crisis. He also cautions that modest second-quarter improvement reported by some private-credit firms may not be predictive.

Berg argues that an oil-price shock would not necessarily be inflationary without monetary accommodation because higher oil spending could displace spending on other goods, wages, or the broader economy. His broader framework is that market consequences depend on the underlying liquidity and policy mechanism, not just the headline price move.

Berg sees the S&P 500's new high as occurring amid narrow breadth: the Nasdaq 100 and Philadelphia Semiconductor Index remained below prior peaks, and only 21 stocks made all-time highs that day. He says momentum and other evidence are more useful at turning points than for interpreting ordinary daily market movements.

Berg says crash lows are generally retested rather than followed by a straight-line recovery, citing declines of 43.93% in the KOSPI and 28.73% in the Philadelphia Semiconductor Index into the July 29 low. He expects those two markets could move back toward their lows within the next month or two, while saying the S&P 500 itself need not retest its low.

Berg views elevated retail equity selling as a positive contrarian signal when broader conditions are bullish, and says investors should currently be positioned long after the Nasdaq and S&P 500 corrections. However, he cautions that the evidence does not establish a multi-year bull move.

Berg's technical evidence is mixed: the S&P 500's gap above its prior all-time high is generally bullish and has historically followed through roughly 80% of the time, while the Russell's January gap was later classified as an exhaustive gap and island reversal indicating a possible top. He also says stock-market tops usually develop as rolling formations, making exact top-calling difficult.