Market Bottomed For Now, Bigger Bubble Crash Awaits | Milton Berg
Speakers
Milton Berg
— Founder, MB Advisors
Summary
Milton Berg, founder of MB Advisors, argues that US stocks are likely forming a short-term low after extreme oversold and volume signals, but he remains medium-term bearish and recommends staying short equities because a larger bear market or bubble crash may lie ahead. He is long 20- and 30-year Treasuries/TLT due to recession and austerity risks, neutral-to-short the US dollar, and has exited gold due to stretched valuation and late-stage bull market conditions. He also favors natural gas equities while warning that technology sector price-to-sales valuations are bubble-like.
- Berg sees technical evidence for a short-term equity bottom and potential rally, especially in small caps.
- He remains 53% short stocks and expects a larger bear market with potential 20-50% declines.
- He is long 20- and 30-year Treasuries/TLT due to slowdown, recession, and government austerity.
- He is neutral on the dollar overall but would lean short if forced to choose.
- He exited gold, viewing it as late-stage and not undervalued relative to inflation or currencies.
- He owns/recommends natural gas stocks including Range Resources, Gulfport Energy, and Antero Resources.
- He warns Information Technology price-to-sales is at bubble-like levels, supporting an AVOID stance on the sector.
- He dismisses several macro inputs, including Japan yields, the Atlanta Fed GDPNow tracker, and neutral oil, as not actionable.
Ideas
Oversold signals point to short-term equity bounce.
Berg argues the market is likely forming at least a short-term low because multiple historical and technical indicators are aligned: his 18-indicator oscillator is at levels seen near bear-market lows, NYSE 5-day volume hit a 375-day high, Investor Intelligence sentiment is bearish, and the S&P 600/Russell 2000 have had extreme 10-day downside momentum. Historical analogs with these combinations often marked lows and were followed by strong rallies, so he says weakness now is a buying opportunity for short-term traders, with potential 5-10% small-cap rallies or minor new highs in the S&P, though he remains medium-term bearish.
Tech valuations are bubble-like; avoid.
Berg points to the information technology index's price-to-sales ratio at 9.9x, far above the 2000 and 2021 peaks. He says this is a legitimate chart suggesting a bubble and a historically overvalued technology sector, even though he is cautious about calling the whole market a bubble. This supports avoiding or reducing exposure to tech on valuation risk.
Bullish bonds on slowdown and austerity.
Berg is bullish on bonds and is long 30% bonds split between 20-year and 30-year Treasuries in his recommended portfolio. He expects a slowdown or recession, which is good for bonds, and believes government austerity/debt reduction and quantitative tightening are also bond-positive. He bought TLT on a technical breakout because he thought 20-year yields at 5.05% were too high, and he expects 10-year/20-year yields to return to around 3.99%.
Gold overextended; exited, no near-term edge.
Berg was long gold but exited in late February. He argues gold is not undervalued relative to official CPI, home prices, or GDP-weighted major currencies, and has already had a major breakout; it looks late-stage rather than cheap. He sees no compelling technical or valuation reason gold must go higher, and expects the coming slowdown/recession and quantitative tightening to not benefit gold in the short term, though he still considers gold a good long-term money asset versus Bitcoin.
Neutral dollar, but prefer short.
Berg says he is neutral on the dollar overall and does not think currency moves matter much for stocks or bonds, but if forced to have a directional view he would short the US dollar. He reasons that foreigners may need fewer dollars if tariffs reduce purchases of US goods, and oil trade no longer necessarily requires dollars, weakening one source of dollar demand.
Natural gas uptrend; buy gas equities.
Berg owns and recommends natural gas stocks because natural gas is on an uptrend, unlike oil which is making lows. He names Range Resources as a recommendation and says they also own Gulfport Energy and Antero Resources, natural gas/oil plays that have been near highs while oil traded down. He remains positive on these holdings despite market weakness.
