The Zigmont Report (Daily Market Recap for 10/30/18)

Mike Zigmont

Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $12B 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.

Bulls are (still) resilient.  After yesterday’s reversal, the bulls could’ve folded.  They didn’t.  And that’s a good thing, even if you’re a bear.  Anyway, the premarkets were nicely higher and it looked like today would be a reflexive up day after yesterday’s down close.  Futures faded shortly before the open however as disappointing home price data released.  I don’t think the actual data was that significant but it allowed an economy-is-weakening narrative to build intraday steam and once the futures quickly dropped from +15-16 to flat, you could feel the minute-by-minute momentum players press on the downside and you could also feel the nervousness build.  It sure looked like the S&P was going to drop again.  Ai-yai-yai!

Bulls went to work right at the open and pushed stocks higher quickly.  They faced the same European-closing pressures as usual but they withstood the selling and recovered quickly.  Post-lunch was a little dicey as the S&P returned to flat and I’m sure every long thought “here we go again.”

That wasn’t the case as the bulls reasserted themselves and took the S&P towards intraday highs and a positive close.

There is some hope/speculation that the earnings this week could goose the market north again.  The biggies announcements are:

  • Facebook after the close today
  • Apple after the close Thursday

I think there’s a logic to that thinking.  It is likely that those companies surprise considerably.  Their *guidance* is the wildcard.  But given the negativity of late, even a little bit of optimism would go a long way to move the market higher.

More important than that granular stuff is the fact that the dip-buyers are *not* defeated, not in the least.

They’ve been overwhelmed for most of the month but they haven’t disappeared.  God love ‘em.

Anyway, the volatility remains significant.  Big drops and big rallies are rule.  Quiet sessions will be the exceptions.

It’s going to be nearly impossible to trade the chop.  I think you have to sit tight completely…or make your moves with small size.

See you tomorrow,