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 shortly after the market close.
The opinions expressed below are my own and do not necessarily represent those of Harvest Volatility Management, LLC
Tremors. The market began the day slightly positive but prices fell consistently over the course of the day. This wasn’t due to any news bombshell. It looks like selling pressure simply built upon itself, which resulted in a significant selloff by the end of the day. We’ve seen intraday momentum dominate price action before and I think that’s what’s at work today. Capital flow was quite high today at 123% so investors were quite active.
The short-term result of today is that we’re in the middle of a bonafide tug-o-war. We’re back atTuesday’s
level for the broader market and the S&P 500 moved like this over the last three sessions:down 19 points
up 21 points
down 21 points
That’s a round trip to nowhere, without a major news event, so a lot of investors aren’t going to think twice about this stretch of trading. I think it’s interesting though because this is a recent stretch of volatility. US equities have been historically calm for quite a while. That fact has bothered, and puzzled, a lot of market participants. There have been moments of volatility of course but they came and went pretty quickly. These last 3 days could be the same thing, a spat of volatility in an otherwise calm journey.
But it could also be the beginning of something. That’s what I want to think about. Are market pressures mounting? Are valuations finally beginning to matter? Is knee-jerk dip-buying about to get tested?
We have no answers to these questions of course.
The bulls say we’ve seen this before, jitters pop up every now and again, the dip-buyers will turn it around sometime soon.
The bears say this is a precursor to more trouble and a sign that the rally has finally exhausted itself.