The Zigmont Report (Daily Market Recap for 5/1/18)

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

Turnaround.  News was slow and uninteresting again today.  So there’s not much to discuss when not much happens.  That’s a tautology!

Anyway, the lack of noteworthy headlines continues and so stocks and bonds and other markets are just drifting along, buffeted by the intraday momentum and sentiment changes.  Today the S&P opened slightly down and slipped consistently until just after 1 PM.  At that time the S&P was off about 23 handles.  That’s a small but noticeable drop.  From there however, the bulls controlled the tape and ramped prices slowly into the close.  Off the lows the S&P rallied about 29 handles.  That’s kind of interesting because…These questions have no clear answerWhy did the S&P drop a non-trivial amount?

  1. Why did it recover and finish with a gain?
  2. Capital flow was light again at 86%
  3. Why are investors essentially asleep?
  4. Why is the tape making these relatively big moves when there’s so little capital moving?
  5. Lots of flow usually means bigger swings, today is the opposite
  6. The FOMC decision is tomorrow
  7. Everybody expects NO CHANGE in the target rate
  8. Nobody knows what to expect in terms of the forward guidance
  9. Stick with 3-hikes-per year or accelerate?

So when you mix all the above together, you get no clarity.  There was a pessimistic morning and an optimistic afternoon and now the Fed is on the clock.

Powell and company do their thing at 2 PM tomorrow.

See you then,