The Zigmont Report (Daily Market Recap for 11/30/18)

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.

Positivity.  Investor emotions are shifting towards optimism.  I don’t think we’re actually optimistic at this point but the worries of a week ago seem far behind us.  The FOMC isn’t going to hike the economy into recession and the dip-buyers used that fact as a catalyst to do what they do best.  We remain in a news-light environment and the charts and the technicals are more significant to the action than anything else.  The S&P went positive for the month yesterday and once it looked like the gains would hold today, the chase long into month-end was on.

The tidbit of news that mattered today was an optimistic headline regarding the trade talks between China and the US.  The headline was that a deal was expected out of the Trump/Jinping dinner.  Bulls latched onto that news as well and controlled the tape for the rest of the day.

November is over.  It goes into the history books as a winner despite the scary lows last week.  The S&P was up ~1.8% in the month and is up ~3.2% for the year.  The bulls have the technical upper hand for the rest of the year as a result.  We’ll have to see if the technicals matter more than the fundamentals in December.

The month will essentially be over by December 21 by the way.  We learn nonfarm payrolls data next Friday the 7th and the Fed will probably hike 25 bips (78% probability now) on Wednesday December 19th.  Options expiration is that Friday, the 21st.  At that point we’re into light holiday trading and it’s doubtful much action takes place from then to year-end.

So really we have three weeks left in the trading year.  Will the perception of the Fed matter more than all the other stuff?  I don’t know even though I think it should.  The market seems very comfortable in its perception that the Fed-is-going-to-slow-and-stop-soon.  The market isn’t going to change its view until/unless the Fed whacks them over the head.

That’s not going to happen anytime soon.  The data isn’t going to heat up, at least not between now and Dec 21.

Throw in seasonality and I think the bulls are licking their chops going into December.

I think it’s misplaced enthusiasm but the longs want to run with it just the same.

I won’t get in their way but I won’t join them either.

Have a great weekend, see you Wednesday.