The Zigmont Report (Daily Market Recap for 8/14/18)

Mike Zigmont

Mike Zigmont, author of the Zigmont Report, is a partner at New York-based Harvest Volatility Management, a hedge fund with over $12B 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 and do not necessarily represent those of Harvest Volatility Management, LLC.

Buy the dip.  After four drops in the S&P, the bulls turned things around today.  It wasn’t due to a specific news item or a fix of the Turkey crisis.  Things just turned the other way.  Some key examples:

  • the Turkish Lira bounced 8% (that’s significant)
  • The Turkish stock market climbed 0.8% (that’s less inspiring)
  • US treasuries fell across the curve
  • US stocks rose about 0.6%

I don’t see much meaning here.  Investors aren’t fearing a Turkish Armageddon and so risk-on was the play today.  Bears are going to spin this as a brief respite in the continuing march lower.  Bulls are going to spin it as the end of the crisis.

The truth is somewhere in between…. until we get some new meaningful news.  It’s all speculation in the meantime.  Because of that, I think we are unlikely to move that far either up or down.

The dyed-in-the-wool bears won’t be able to push things down too far without the assistance of negative news.  The converse is true too.  The bulls can’t resume the climb on hope alone right now.

So I think we’re stuck in a range.  We’re going to chop up and down until we learn something meaty.

Hang in there, see you tomorrow,