The Zigmont Report (Daily Market Recap for 5/4/18)

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

The quietest rally.  Nonfarm payrolls data (+164k vs +193k est & +135k prior revised from +103k) was the news of the day.  This is a tad disappointing of a release but the positive revision takes the (small) sting out of it.  Essentially the nonfarm payroll data today is a nonevent.  The headline unemployment rate hit 3.9%, which is very low.  We haven’t seen a number that low since just before the dot-com bubble burst.

There’s room to interpret the NFP data both bullishly and bearishly but each case has its flaws.  I would argue that neither is compelling.  The markets didn’t react strongly either.  From the release to the open, equity futures fell small.  The S&P opened about 10 handles below last night’s close.  It looked like the bears would have a good day.

Treasuries didn’t react much to the NFP data either.  Yields didn’t really move and the curve flattened a touch.

The Dollar strengthened small.

What I’m trying to say is that the major markets didn’t perceive much significance in the nonfarm payrolls data.

Yet US equities moved today.  They moved a lot too.  Capital flow was light at 86% and yet the rise in the S&P was quite large.  It was also quite steady and quite unexplained.  Here’s the picture of the day’s action.

No jumps, no back-and-forth, just a steady lift.

If you ask me, the dip-buyers pushed in and the intraday momentum players kept the party going.  Shorts probably got the heck out of Dodge ahead of the weekend too.

Lots of talking heads are going to read into today’s action.  Moving average this, nonfarm payrolls that, fantastic earnings season finally being recognized… blah blah blah.

Nonsense.  It’s just another day without a significant change in the investment landscape, where the investor sentiment is the only force at work and it just so happens the tape got on a roll.

This is not the beginning of a trend, despite what a lot of people will say.  It is yet another move in the choppy blender that is our equity market.

See you Monday, have a great weekend,