The Zigmont Report (Daily Market Recap for 11/1/18)

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.

Improving.  Sentiment is on the mend.  The market is viewing the glass as half-full now.  With the lows 3 days and 5% percent behind us, I think we’re drawing in the more tentative of the dip-buyers and permabulls.  The longs were assisted today by promising news on the US/China trade front also.  President Trump tweeted that he had a good conversation with Xi Jinping.  They have a meeting scheduled during the Next G20 summit this month.

Last week, one of the negative events was the announcement that the US was preparing to impose tariffs on *all* Chinese imports if the coming negotiations failed.  That’s a big deal.  This market has assumed quick and painless resolutions to the trade war possibilities from the jump.  I think the market started to price in the risks last week.

Today I think the market is returning to optimism on the trade front.

Assuming things are quiet until we learn about an agreement, how much more lift can we get?  How many more days can the bulls control the market?

It’s obviously unanswerable but I don’t think we’re done going up.  I don’t know if the up-session streak will go for much longer but we’re beginning to drum up the fear-of-missing-out and we’re dabbling in positive speculations to boot.  If the newswire is quiet for a bit, I think the bulls will have the advantage.

That said, if the news isn’t quiet, I think sentiment is going to turn fast.  We’re in a more volatile environment so the swings are going to be quite large and abrupt.

Tonight we learn about Apple.  That is unlikely to be a negative event.  It may not be awesome enough to kick the market up a couple percent but it shouldn’t send it down.

Tomorrow we learn the October nonfarm payrolls data (+200k est vs +134k prior).  Only extreme numbers will jolt the market, but here’s the rub…  if the number is huge, it’s bad for the market… if the number is very low, it’s bad for the market.  The bears love the tails, the bulls will loathe an outlier.

By definition, that’s unlikely so probably we’re looking at some bullish action.

I don’t think it has much further to go however.

I certainly don’t believe we’re resuming the march to new highs either.

See you tomorrow,