Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $10B AUM, offering volatility management solutions to its investor base worldwide. Mike has been publishing his daily newsletter (Monday-Friday) privately for the firm’s investors and his personal contacts in the investment business since 2008, sending it daily shortly after the market close.
The opinions expressed below are my own
Tired? The morning began like most other recent mornings. Premarket futures were up small and things were quiet on the newswires. At 8:30 AM, CPI printed a bullseye. Month-over-month February ex-food and energy CPI was (+0.2% vs +0.2% est & +0.3% prior, no revision). Futures shot up 15 handles on the release and it looked we were off to the races again. The narrative was that inflation was tame and the Goldilocks environment for stocks would continue.
The market peaked 15 minutes after the open (+19 handles) and faded slowly but consistently over the rest of the session.
There’s no smoking gun news story or catalyst to explain the pivot today. I’m assuming the bulls ran out of gas (near-term enthusiasm). The S&P rallied about 150 handles in 7 sessions so a pause, just for the sake of a pause, wouldn’t be crazy.
I don’t know what this means in the short term. Without news, it’ll be tough for the bears to break the will of the bulls by pushing things much lower. The dip-buying behavior will not, and cannot, change without a major shift in the investing landscape. If things are quiet, the dips will be shallow and reversed.
We’ll just have to see how news helps the bears or the bulls in the next couple days.
Really, we’re just twiddling our thumbs though. The FOMC decision on the 21st is the major catalyst on the horizon.
See you tomorrow,