A historic rally for the S&P 500 is just getting started, says Wall Street veteran who called the April 2025 bottom

Wall Street veteran Milton Berg says the S&P 500 rally has room to run and calls pullbacks and new highs buying opportunities. The article is bullish on market direction, emphasizing breakout strength rather than any fundamental deterioration. It is likely to support risk-on sentiment, though the direct market impact is more commentary-driven than event-driven.

Analysis

The market is now in the phase where price action feeds itself: once broad indices clear prior highs, systematic trend-following, CTA re-risking, and retail momentum flows typically extend the move for weeks to months, even when headline narratives are already complacent. The second-order effect is that breadth matters more than valuation in the near term; high-beta cyclicals, small caps, and unprofitable growth tend to outperform defensives as managers chase relative performance and underinvested cash gets put to work.

The bigger risk is not that the trend fails immediately, but that positioning becomes one-sided. When implied volatility stays muted while indices grind higher, it encourages overwriting, short-vol selling, and passive inflows that can create a fragile tape; the first real drawdown can then be sharper than expected because there is less incremental marginal buyer support. That makes the next 4-8 weeks especially important: any macro wobble, rates shock, or disappointing breadth reading could force a fast de-grossing even if the longer-term bull case remains intact.

The consensus appears to be underestimating how much of the upside can come from a rotation rather than a straight index melt-up. If leadership broadens into equal-weight, semis, financials, and industrials, the index can keep making new highs even as mega-cap concentration cools; that favors relative-value longs in the laggards rather than chasing the headline benchmark. Conversely, if leadership stays narrow, the rally becomes more vulnerable to single-factor crowding and a sharp unwind if one or two megacap names miss.

The cleanest contrarian read is that this is bullish until it isn’t: the trade is not to fade the breakout immediately, but to respect the trend while using options or pairs to avoid paying full delta into a crowded consensus. For active risk, the best reward-to-risk comes from owning pro-cyclical beta on dips and hedging with volatility exposure or defensive shorts, because upside can persist while downside tails still reprice quickly.

Key Decisions for Investors

• Stay long SPY or QQQ on 1-2% pullbacks over the next 2-6 weeks; target a 2:1 upside/downside into the next quarterly catalyst window, with a tactical stop if breadth deteriorates for more than 3 sessions.
• Add a relative-value long XLI / short XLU pair for the next 1-3 months; this captures a rotation into cyclical participation if the breakout broadens, while limiting exposure to a pure index melt-up.
• Buy IWM call spreads 2-3 months out on dips; small caps typically benefit disproportionately when investors move from benchmark chasing to beta expansion, with attractive convexity if rates stabilize.
• Initiate a small VIX call spread or SPY put spread hedge for the next 4-8 weeks; the market is vulnerable to a volatility air-pocket if positioning is crowded and a macro shock interrupts the momentum trade.
• Use semis as a momentum confirmation basket: long SOXX only if it holds relative strength versus SPY; otherwise avoid chasing, because the rally is more durable if leadership broadens beyond mega-cap concentration.