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.
Quiet return. With the bond market open again, capital flow returned to equities (105%). The response to yesterday’s drop wasn’t very impressive however. The dip-buyers didn’t flex their muscles today. They pushed equities up modestly in the first half of the day but couldn’t hold on.
They must be waiting for something. What will bring them out in force? Lower prices are one possibility but I think a bit of good news would spark them into meaningful motion. The market has rallied steeply here and there and those rallies were a combination of some meaningful catalyst and short covering.
The near term doesn’t present us with scheduled events that could boost the market. CPI and retails sales data tomorrow and Thursday might do it, but they’d have to convince the market that the Fed would back off from its hiking path and not suggest a GDP weakening. I don’t know how likely that is.
That said, Chairman Powell gives a speech tomorrow night and if he throws a dovish comment or two out there, we could have quite a rally.
Obviously, if a positive US/China trade tidbit leaks, stocks will rally too.
What I think we’ve got, for the moment, is a lull. As long as headlines are trivial, the bears don’t seem to be able to send equities down too much more and the bulls don’t want to act on technicals alone.
That leaves news. So whether it’s something we can anticipate or something out of the blue, I think we’re meandering until then.
See you tomorrow,