The Zigmont Report (Daily Market Recap for 4/3/18)

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

It’s always obvious in hindsight.  After yesterday’s drubbing, US equities bounced back.

The S&P recovered about half the damage from Monday although things looked dicey at different times during the day.  The S&P rallied about 10-15 handles on the open but faded to down 6 around 10 AM.  The selloff was widely attributed to another Trump tweet that attacked Amazon.  Equities bounced around for the bulk of the day, rallying some and dropping back to flat around 2:30 PM.  At that point bulls finally pushed the tape significantly and we closed with a decent rally for the day.  That catalyst for that *appears* to be a report that the Trump Administration is not actively seeking to act on the President’s problems with Amazon.

  1. Trump vs Amazon…. Who the heck knows what it means?  The markets are struggling to figure out what this digital jawboning means.  There was a time, last year, when the market kinda sorta ignored what Trump said and wrote it off as bluster and the quirkiness of Trump’s personality.

Then the tariffs went through and the market reconsidered how it reacted to Trump’s words.

Well here we are again, starting to dismiss what Trump says.

I don’t know if it’s wise but that’s the momentary mindset of US equity investors.

As the tape climbs, investors (specifically the bulls) will spread the narrative that the Trump tweets/statements aren’t so significant and they will become more confident in their conclusion.

I say watch out.  News today was pretty thin so the bulls had fertile conditions to lift the tape.  There will be other quiet days in the near term so there’s probably more upside in the cards…especially because we closed about the 200-day moving average today… but….

It’s only a matter of time before Trump drops another bombshell, something that the market will have to believe (in part).  That’s going to sting the tape something awful again.

My conclusion is that a day (or more) of rallies doesn’t change the environment.  The environment is volatile and the market is nervous.  Maybe things will change when the next earnings season comes around (starts April 12th)?

Until then, this is a blender.  There is no playable trend.  There is only chop.

See you tomorrow,