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 and do not necessarily represent those of Harvest Volatility Management, LLC.

Keeps climbing. Earnings results this morning were officially pretty good but a couple of reporting stocks fell as a result and the most notable firm of the batch, Morgan Stanley, actually disappointed. MS fell hard and was off 6% shortly after the open. The broader market was slightly off as well. The S&P opened down about 10 handles but worked its way slowly upwards over the course of the session. There wasn’t meaningful news pushing the market either until around 2:30 PM.

About that time, newswires reported that the US was considering lifting tariffs on China. Some stories said it was to help with the coming negotiations. The S&P rallied sharply on the reports, about 23 handles. Then the denials started coming through. Who knows how many different people are actually involved in the US/China negotiations but it seemed that a different person said something different in each minute as the press reached out to them for comment. The common thread of all their statements was that this concept of lifting tariffs was false.

Hmmm and double-hmmm. The market fell and took back about half of the initial pop as we wandered around towards the close.

The question many are asking is who the heck is leaking this story, that appears to be almost entirely false? The question I am asking is why the heck didn’t the market give all the gains back?

We’re in an odd spot right now. We’re sensitized to the headlines but not as touchy as in December. The bounce from Christmas Eve and the earnings results so far are ginning up more and more bullish emotions. The dip-buyers are doing a victory dance. Most market-watchers are wondering when this upside move runs out of gas. The whole thing feels very monkey-see, monkey-do….but nobody knows who’s leading. We’re all watching the tape and if it ticks up, investors jump in further.

That’s a recipe for a disaster if the tape goes the other way but it hasn’t even hinted at that possibility this year.

Maybe the good ‘ole January effect has kicked in and we’re just in for a helluva positive month?

I view the tape as fragile even though the volatility looks low and the rally appears bulletproof.

There’s something ersatz about this climb. The news and the moves are not going hand-in-hand and the unwillingness of the tape to fully unwind the rally from the bogus tariff rumor is the evidence that worries me.

See you tomorrow. -Mike

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