The Zigmont Report (Daily Market Recap for 9/21/18)

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.

Digestion.  Economic news and data was pretty uninteresting with the exception of a worsening of the Brexit situation.  The actual exit negotiations appear to be hitting an impasse, or at minimum a nasty rough spot.  Global markets didn’t care, as usual, but the Great British Pound took a substantial hit.  Interestingly the UK equity market was unaffected….  So the point here is simply that the one large news story for markets only really affected the Pound.  The rest of markets did their own thing and US equity markets finished having treaded water for the day.

Option expiration generated the usual pattern in capital flow (picture below), which is a welcome change from the summer, but all that flow didn’t push the tape anywhere.  I guess all the strong directional plays happened yesterday.  We opened positively this morning but drifted to unch by the end of the session.

It looks and feels like everyone was trying to get to the weekend with Thursday’s prices.  Next week brings Wednesday’s FOMC decision (25 bps hike expected), so making yet another big directional push before then strikes me as a little out of place.  I still think that the forward guidance in the statement and the press conference will be more important than the technical changes in the market we just experienced.

Trading before then *should* be quiet/directionless.

Have a great weekend, see you Monday,