Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $12B 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 and do not necessarily represent those of Harvest Volatility Management, LLC.
That didn’t last long. Value isn’t large and in charge just yet. Dip-buyers came out of hiding and made their moves. The S&P opened about 10 points higher than last night’s close and climbed as high as +22 around lunchtime. Macro news wasn’t anything special and all the existing narratives in the macro space remain. Earnings weren’t anything special either. The key upcoming event of earnings season is still Apple’s release today after the close. There was a development on the trade/tariff front, China and the US are going to talk about easing up on the tariffs. That’s not ground-breaking if you ask me but it gave the market a bit of a bullish push shortly after the open. Capital flow was healthy today at 108%.
What is looks like, to me, is that on the last day of the month the typical bulls and dip-buyers jumped into a down tape. Any fund manager chasing their benchmark probably saw today’s early session as an opportunity to make up ground or stretch their lead. The S&P gained about 3.6% this month, so buying into the dip of the past three sessions makes sense.
The value vs growth struggle isn’t over. Today’s just a clear reminder that the bulls aren’t about to roll over without a fight. The future isn’t set in stone either. Whether value or growth leads going forward will depend on what AAPL says, what the FOMC says, and what the nonfarm payrolls data shows.
The ingrained behavior of buy-the-dip is 9 bulletproof years in the making. No way is it going to evaporate without big changes in the investing landscape.
See you tomorrow,