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The podcast discusses a potential blow-off top scenario in the stock market, comparing the current market dynamics to historical instances such as 1929 and 1968. The significant gain of 23.59% in 63 days following a 10% correction raises questions about the nature of the current market momentum.
An analysis of equal-weighted indices like the Russell 2000 and S&P 1500 reveals discrepancies compared to cap-weighted counterparts. The failure of the equal-weighted Russell 2000 and S&P 1500 to surpass previous highs raises concerns about the breadth and strength of the market, hinting at potential underlying weaknesses.
The divergence in the banking index behavior, lagging behind other market indicators, indicates an aberration in the market pattern. Normally, the banking index aligns with broader market trends, but its divergent performance adds a layer of complexity and uncertainty to the overall market outlook.
Speculation regarding a possible market peak is fueled by observations of the market's behavior across different indices and historical patterns. The analysis delves into the unique aspects of the current market environment, exploring potential signals of a significant market turning point.
The discussion emphasizes the importance of identifying specific divergences in the market, such as when the Russell 2000 and S&P500 peak on the same day during bear market rallies, indicating a potential market top.
There is a notable shift towards speculation in high-quality companies rather than small caps or speculative stocks, which is regarded as a significant indicator of potential market instability.
The analysis combines technical indicators with the momentum of earnings and stock breaks to gauge potential market movements, suggesting a cautious approach to investing based on various signals and indicators.
Cycle dates play a crucial role in anticipating market peaks and bottoms, providing insights into potential turning points in the market and guiding investment decisions towards a more cautious approach.
The discussion delves into shorting strategies focused on overextended stocks to capitalize on potential market declines, highlighting the importance of understanding market trends and adjusting investment approaches accordingly.
An exploration of institutional trading patterns reveals the significance of observing market behavior and sentiment to adapt investment strategies and navigate changing market dynamics effectively.
The analysis extends to global market trends, including evaluations of European and Chinese markets, emphasizing the interconnectedness of financial systems and the potential impact of international markets on overall investment strategies.
The discussion underscores the consequences of speculative sentiment on market conditions, emphasizing the need for prudent risk management practices and an adaptive approach to investment decisions.
A cautious approach towards market volatility is recommended, considering potential market tops and the impact of economic factors on investment outcomes, highlighting the importance of risk assessment and adaptive investment strategies.
A reminder of financial risk principles and investment psychology underlines the significance of disciplined investment approaches and the incorporation of market insights to navigate evolving market landscapes effectively.
Milton Berg, renowned market technician known to viewers for his contrarian bullish call in January of 2023, returns to Forward Guidance with a far less rosy outlook. As of recording on February 28, 2024, Berg is decidedly bearish in the face of a stupendous stock market rally. He sees signs of an exhaustive peak and expects a decline, which could either be a corrective move in the middle of a bull market or the beginning of a true bear market.
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More About Milton Berg: https://www.miltonberg.com/
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Use code FG10 to get 10% off Blockworks’ Digital Asset Summit in March: https://blockworks.co/event/digital-asset-summit-2024-london
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Timestamps:
(00:00) Introduction
(00:15) Milton's Buy Signals Have Continued To Appear In The Stock Market
(06:11) This Bull Market Is Unique In Its Strength, And It Its Weakness
(10:53) Indicators That Suggest A Stock Market Top In February 2024
(15:20) Why Milton Is Leaning Bearish
(24:05) Federal Reserve Interest Rate Cuts And Earnings Cycle (Milton Disagrees That These Are Bullish Factors)
(30:55) There's Lots Of Momentum In This Market - But It's Not Bullish Momentum
(35:28) Banking Index Is Behaving Strangely
(40:37) Evidence This Could Be A Blow-Off Top
(49:33) VanEck Ad
(50:16) This Is Not A Healthy Market
(52:34) The Permabears Could Finally Be Right
(53:13) Speculation In Blue Chip Companies Is Extreme (Although Speculation In Unprofitable Companies Is Not)
(01:00:09) Mind The GAP!
(01:05:29) Portrait Of A Sick Market
(01:07:22) New Highs In Europe And Japan - Milton Isn't Impressed!
(01:10:48) China
(01:12:37) Cycle Dates
(01:16:54) Climax Top In SuperMicro (SMCI) - Milton Was Long But Has Flipped Short
(01:21:31) If There's A New Bear Market In 2024, It Will Probably Cause A Recession (Unlike In 2022)
(01:26:35) Milton's Long-Only Portfolio
(01:28:26) Milton's Short List Of Overextended Stocks (Including Nvidia)
(01:33:12) Would A Forthcoming Sell-off Be A Corrective Move During a Bull Market Or The Beginning Of A New Bear Market?
(01:35:29) Alibaba, Paypal, and Berkshire Hathaway
(01:36:43) A Review Of The Buy And Sell Signals
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
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