The Zigmont Report (Daily Market Recap for 4/24/18)

Mike Zigmont

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

Tomorrow will be interesting.  News today was slow again.  Premarket futures were trading higher and overseas equity markets were up as well.  It seemed like the bulls would own the day.  The tape drifted lower slowly and consistently over the session however it accelerated after the Caterpillar conference call.  On that call, management said, in the guidance, that CAT experienced (past tense) peak earnings.

That worry, that we’ve just experienced the fundamental top, has been widespread in equity-land.  To have it stated so clearly, by management of a stock that is plugged into global growth… is very helpful to the bears.

Throw into the mix the rising interest rates across the curve and the fact that the 10-year US treasury hit 3% yield today (a noteworthy technical) and you have yourself a bit of a swoon in stocks.

To be honest, the selloff today isn’t too scary but it certainly helps the bears with their case that finally, FINALLY, valuations cannot expand.  In fact, they should probably contract.  I’m with them on that conclusion.  I’m a valuation bear but I’m less sure of the timing.  Here’s the key though.

There was no meaty news today.  The tape slipped over time and the intraday momentum traders weighed down stocks.  So this is a perfect setup for the dip-buyers.

Remember them?  They haven’t gone anywhere but they haven’t been called upon to act lately either.  Today is yet another opportunity for them tomorrow.

Tomorrow will be interesting to see if the dip-buyers jump in *like they have over the last 10 years.*

I think they will but they’ve been jumping in here and there for a while and they haven’t been vindicated with new highs since January.  When will they fatigue?

I don’t know but I’m willing to bet they’re not tired yet.  If they do, what they normally do, I would not participate with them.  I’d sell into them.

See you tomorrow,
-Mike