The chief executive of Milton Berg Advisors, Milton Berg, who heeded his own warning signs earlier this month has turned bearish on the S&P 500 and Nasdaq on July 2 as his two portfolios have seen gains of 20% plus this year. Berg has bailed on stocks and bonds in the longest “economic expansion” in history.
But Berg isn’t the only one who is predicting a market downturn. Bank of America Merrill Lynch, who warned clients Friday of an “overshoot” in credit and equity prices in coming months, also warned that that would be followed by a “big [second half] top in asset prices.” Caution of that kind seems to be only getting louder as we bump along to these new and historic highs, according to a report by Market Watch.
All this comes on the heels of the news that the Federal Reserve has turned more dovish.
Berg told digital financial media group Real Vision in an interview that there’s one big reason he’s out of the market for now: “We have a list of more than 100 indicators that we match to previous market peaks and of all these 100 only two are inconsistent with levels seen at market peaks.”
Berg uses a trove of proprietary indicators and historical data to make his calls. His claim to fame, outside of working with hedge fund biggies like George Soros and Stanley Druckenmiller, is nailing the 1987 market crash to the day. –Market Watch
But Berg says this market is unexplainable and things are not adding up. The investor says that even as stocks are nearing a peak, thirty-year U.S. bonds on a 6 and 12-month basis are doing far better than they’ve ever done at a final market top. That isn’t really making much sense, says Berg. He also says that the bond conundrum may also send another message to investors: That the final leg of this stock market rally coincides with a bond market rally, which will signal a peak for stocks.
Is that something to watch for? Maybe, considering Berg called the 1987 market crash.