The Zigmont Report (Daily Market Recap for 1/17/18)

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

Dip buyers gonna’ dip-buy.  I guess investors thought yesterday’s 10 point drop was an egregious overreaction because bulls corrected it with a vengeance.  Capital flow was robust again at 120%.  Investors are pumping significant amounts of capital through US equities and the consensus opinion is that stocks should be higher.

Like most trading sessions in the last month, there’s no big news highlight that might explain today’s action.  You know what was mentioned, ad nauseam, as the reason for today’s rally?  The tax cuts!

That’s laughable.  Unfortunately, it’s one of those assertions that impossible to prove and impossible to disprove.  You either believe that markets are fairly efficient or you don’t.

There’s obviously *something* at work in the markets however.  I think one of the problems (I have) with the last month of price appreciation is that it all happened in the absence of surprises.  The news and data that rolled out didn’t surprise the market.  Usually, it’s the surprises that move the tape.  Lately, it’s just momentum.

Warren Buffett was on CNBC last week and he summed it up nicely… he was talking about Bitcoin but it applies to anything.

“IF YOU’RE BUYING SOMETHING BECAUSE IT WENT UP YESTERDAY OR LAST WEEK, THAT IS NOT A GOOD REASON FOR BUYING ANYTHING IT WILL GET YOU IN TROUBLE OVER TIME.”

How long is this momentum going to last?  That’s the only question I struggle with.

See you tomorrow,
-Mike