The Zigmont Report (Daily Market Recap for 10/8/18)

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.

Squirrelly.  US treasury markets were closed for Columbus Day so US stocks couldn’t take their cues from bonds.  They ended up paying attention to Europe first and then bought the dip.  Europe was off modestly and the equity markets there are on the cusp of a bear market.  Italy worries are bubbling up and the Italian rates rose across the curve.  This mix of concern spilled over to the US and our markets opened down about 9 handles.  Speedy dip-buyers drove the S&P 500 up to unch’d by 10 AM but couldn’t hold off the pressure from Europe and they approached their close.  They sank towards their lows of the day and so did we.  Just before lunch we formed our bottom with the S&P down 21 handles.  The market bounced around down there and the slower dip-buyers jumped in and took the index all the way back.

It was a wild ride.  If you just look at the close, you’d think today was boring.

Under the hood we have some forces stirring.  The dip-buyers are obviously out there but the sellers…who’ve been absent for most of the year, are back again.  Interest rates are influencing them as are overseas markets more generally.

I don’t think we can say the bulls or the bears have the advantage at this point.  The bulls are no longer indestructible, as they were two weeks ago, but they aren’t powerless either.  They continue to push into every intraday dip.  The bears aren’t breaking anyone’s back although they are winning over the last 3-4 sessions.

All this drama is occurring without much in the way of news either.  When a strong catalyst comes, one camp *should* overwhelm the other.  I don’t know what foreseeable catalyst qualifies at the moment.

It feels like everyone is more jittery though.

See you tomorrow,