The Zigmont Report (Daily Market Recap for 6/26/18)

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

Small bounce.  Bulls took advantage of yesterday’s drop and moved the tape higher today.  It wasn’t a resounding victory but it was a win nonetheless.  The question is whether today’s gain lends courage to the other buyers-in-the-wings and they come out tomorrow or whether they all they could today and they just don’t have the muscle/money to push the tape further.

I suspect they simply need more courage.

Recent dip-buying behavior has been a multi-session affair.  The first day’s bounce has been small but the second day’s move has had more oomph.

We’re in a pure play of psychology right now.  Trade rhetoric isn’t introducing new threats (yet) and data releases are pretty minor.  It’s a news-lite environment where feelings, existing attitudes, and the recent price action is driving behavior more than other factors.

The dip-buyers haven’t died.  They’ve become a bit more cautious than back in ’16 & ’17.  In 2018, they become emboldened with each up day after a slide.

So here we are.  One session after the dip, dip + 1.

Dip + 2 looks good (I think).

I wonder how long it’ll last.

I wouldn’t join in though.  I don’t know when the dip-buyers are going to be left holding the bag but at these valuations and in this environment, I think the reflexive behavior of dip-buying is dangerous.

See you tomorrow,