The Zigmont Report (Daily Market Recap for 4/16/18)

Mike Zigmont

Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $10B 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

Big rally, little volume.  The strikes on Syria by American missiles haven’t cascaded into major geopolitical problems and US equity markets rallied in response.  Who knows what comes next but at the moment it appears to be a non-event.  Capital flow was very light at 71%.  Investors were effectively sleeping through today’s trading, even though the tape moved significantly.

It’s the beginning of earnings season.  That’s the fundamental event in the near-term.  Let’s discuss generally….

Expectations are high.  While the earnings growth numbers will be very good (potentially record-breaking), the question is whether prices are ahead of the results or not.  Only time will tell.  Bears don’t have much hope for an earnings season bust.  Maybe the best result the bears can hope for is a slightly down season (when it comes to the stock indices).  Major earnings disappointments and ugly guidance just isn’t in the cards and that’s what the bears need for earnings season to be a bearish catalyst.

Bulls are hoping small beats can push the indices into new highs but I think that’s a tall order too.  We’re looking at the same-old, same-old incremental beats that we’ve seen for the last few years.  That’s probably good enough to maintain current levels but I doubt it’s good enough to expand multiples yet again.

If you ask me, we’re still in a choppy range.

See you tomorrow,