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
No legs. It’s the end of the month and the news was slow and the bulls made a push in the morning that didn’t hold. April is an up month and it looked like bulls wanted to push the tape a little higher for the month-end close. However, not a lot of investors were active today. Capital flow was very light at 87%.
When the day was done, the S&P finished the month up about 30 bps. That’s not a lot but the S&P dropped in both February and March, so the bulls get the official win. From an intraday standpoint, the S&P went steadily down over the entire session. This suggests, to me, that the bulls that are active just don’t have the muscle anymore. Here’s a picture of the day.
This is not a horrendous looking chart but it sure doesn’t look bullish to me.
We spent the bulk of the year, from late Jan to present, in a sentiment shift. The crazy tape-chasing bullishness fever broke and it’s not coming back. The sentiment now is mixed. Valuations remain high but the data doesn’t require a contraction of the multiples. The earnings are great but the surprises aren’t big enough to force new highs.
The bulls and the bears each have their usual cases to make but they don’t have the evidence/catalysts they need to get the entire market to trend in their favor.
I don’t think we should be surprised as this behavior continues. The good news isn’t good enough and the bad news isn’t bad enough.
The tape will chop but not trend for as long as this dynamic continues. Small bits of news and data won’t change the investment landscape either.
We go nowhere, or maybe slightly down, until a big catalyst occurs.