Benzinga - by Benzinga Neuro, Benzinga Staff Writer.
The stock market may be on the verge of a massive crash, with a veteran technical analyst predicting a potential 60% plunge. This warning comes amid concerns of an imminent recession.
What Happened: Milton Berg, a highly experienced technical analyst, has raised the alarm about a possible 60% decline in the S&P 500. This would bring the index down to around 2,000 points, a level not seen since 2016, reported Business Insider on Wednesday.
“These perma bears who are looking for a 60% decline in the S&P, and they’ve been saying it all along, they may finally be right,” Berg told in the latest episode of “Forward Guidance” podcast.
“The market’s probably going to turn lower, and it probably will be a recession or at least a major slowdown,” he said.
Berg, who has previously advised prominent investors like George Soros and Stanley Druckenmiller, pointed to various technical indicators such as the Federal Reserve’s interest rate hikes and extreme investor sentiment as signs that the market may be reaching a tipping point.
Despite the potential for further market gains, Berg cautioned that the market could soon reverse. He likened the current stock rally to the period preceding the Wall Street Crash of 1929 and the dot-com bubble burst in 2000.
Many investors, analysts, and economists have previously predicted a stock market crash and an impending recession, but these forecasts have yet to materialize. However, with his extensive experience and knowledge, Berg is a voice worth considering.
Why It Matters: The warning from Berg comes at a time when the market is showing signs of volatility and uncertainty. The possibility of an interest rate cut in 2024 has been suggested by Jerome Powell, the Federal Reserve Chair, due to the uncertain economic outlook and inflation concerns.
CNBC’s Jim Cramer has also suggested that the current market activity may indicate a peak rather than a bubble. He pointed to specific stocks and the Nasdaq Composite’s recent decline as evidence.
Meanwhile, U.S. stocks are on track to rebound after experiencing a pullback in the previous two sessions. The potential for a market rebound, combined with the warnings of a possible crash, adds to the current market uncertainty.
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