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
Boing! Equities bounced from yesterday’s modest drop. Asian and European markets didn’t recover fully but the US market essentially did. The tariff threats weren’t rescinded so this isn’t a reversal of circumstances. It’s just a run-of-the-mill rally after a drop. Buy-the-dip appears is alive and well. We’ve seen it before and we’re seeing it again. No need to overthink things.
News was pretty uninteresting today. Headlines were mostly trivial and there’s nothing fundamentally crucial that’s about to be released either. It’s summer and investors are trading like it.
The one thing I’d like to highlight is that while the S&P 500 (SPX) was up small and seems stuck in the 2600-2800 range since March, the Nasdaq 100 (NDX) hit a new all-time high. The NDX is up 12.7% for the year while the SPX is up 3.5%.
The dispersion in performance is what I wanted to highlight. The bull market is continuing via a narrower group of stocks. This is not an alarm. Sometimes market leadership shifts. Maybe the broader market gets some mojo soon and the rising tide will lift all boats. Or maybe not?
At the moment, NDX is on a tear relative to the SPX. See below.
I don’t know why investors are funneling money from broad equity buckets into tech but they are.
This isn’t the recipe for a sustainable bull market. It’s just fine in the short term though. The question, as always, is whether this is the sign of the start of a new leg of a rally (i.e. tech is leading the way) or we’re about to roll over (i.e. tech is the last refuge for bulls’ capital).
See you tomorrow,