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
Back to work. It’s a new year and the bulls didn’t waste a lick. Futures were up around 8 handles before the open (despite Europe trading lower) and the S&P rallied from there after a little choppiness in the initial action of the morning. Capital flow was healthy today at 108% but news was unremarkable.
I’m wondering whether today was more of a reflexive dip-buy after Friday’s drop or more reflective of coming January flows.
The answer probably doesn’t even matter. Bullishness, for whatever reason, is the tone of the market and in the absence of news, that tone is resilient and persistent.
It’s a new trading year but it’s also silly to expect a whole new market narrative just because the calendar flipped. The market has been incredibly stable for more than a year, climbing all the while. I think we’re at the point where investors are coming to expect, and rely on, those behaviors. And while news remains immaterial, those market behaviors become self-fulfilling.
I find this dynamic worrisome although the market at-large thinks it’s peachy keen.
It’s very odd to worry for so long about something the market seems to dismiss as impossible. I’ve used the musical chairs analogy for a while and I think it’s a valid analogy.
The puzzling and worrying part, isn’t how long the music has played, it’s that nobody’s nervous that the music will stop.
Nobody but me, it seems.
See you tomorrow,