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
It was a dip. Hurricane Irma is the most pressing news item of the moment and it looks like it’s going to be very dangerous and costly to the US. Markets are rightly nervous about it but have not sold off in anticipation. I guess investors are in wait-and-see mode with respect to Irma. While we wait however, there was a dip yesterday and you know what investors do with a dip.
Capital flow was 101% but that’s close enough for government work. Let’s call it normal flow. Energy led sectors today while telecom lagged. I don’t know if there’s a signal we can read from the relative sector performances.
The point I’m trying to make about today is that it looks and feels just like most other post-dip sessions this year. The difference is that there are some significant events on the horizon. Irma is the biggie but with North Korea stirring things up, the market looking around for other potential events to rattle trading.
I think volatility is going to be more persistent for the rest of the year. I don’t know how high it can/will get but the historical lows of earlier are probably not returning. That was a special mix of summer, investor complacency, quiet newswires, and smooth economic progress.
So if the world is now more volatile (but still pretty tranquil compared to history), what’s it mean?
I think it means that bulls face an uphill battle. The no-brainer trend higher isn’t a no-brainer any more.
I think riding the bull, if you’re going to do it, should be done with smaller size. Momentum doesn’t feel like it’s all the longs need any more. It feels like the bulls need new affirmative catalysts.
That’s a higher bar to clear than earlier in the year.
See you tomorrow,