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.
From the brink. On another quiet day (with respect to news events) the market gyrated quite a bit. It was the bears day from the get-go. The S&P started down about 40 points and slowly got worse until around 2 PM. At that point, for reasons unknow, the tape turned. And when it did, it did so in a hurry. All the damage of the day was undone and we finished the day up almost a percent.
That’s effectively a push (given all this volatility) but I think the dip-buyers can hang their hats on a big win here. In the very short term, it looks like a bottom has formed. Tomorrow could always destroy that notion but the S&P is up 2 days in a row, for the first time all month *and* the S&P turned around intraday in the last two sessions. Yesterday we bottomed around 2350 and today we bottomed around 2400.
Those two levels are now *the* technical support levels that all the chart-watchers will focus on. If 2400 gives way, 2350 becomes Custer’s Last Stand. Short and long term bulls will be watching that closely.
I think the bears are on their heels at the moment and so while they are looking for 2400 and 2350 to come back into play also, I think they are more worried about further losses.
Shorts are probably looking at 2500 and 2580 as fight-or-flight levels.
Notice that everything we are talking about is chart-based. Earnings schmearnings…. We’re in the emotional blender and investors are trying to divine the next move through tape-watching.
Turns are going to be nearly impossible to identify but emotions tend to run in streaks so expect long *intraday* runs. The good vibes are going to build with every uptick and the depression is going to swell with each downtick.
We’re still in the blender. I don’t have any idea when it’ll end but because we’ve seen the bulls dig their heels in here, I think we’re going to have a little bit of range-based action…. I don’t know how long it’ll last but I’m hoping until January?
A violent range isn’t any fun but at least it’s a range….I hope, I hope.
See you tomorrow, -Mike