The Zigmont Report (Daily Market Recap for 9/27/18)

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.

Round trip.  With the exception of the Kavanaugh/Ford testimony, today was a quiet news day.  Bulls pushed equities meaningfully higher intraday (+22 at the highs) and bears took most of the steam out of the tape during the afternoon.  Capital flow was light at 92%.  It looks very much like the technical traders waited for the session after the FOMC decision.  The bullish techies slightly beat out the bearish techies.  Will that matter to most of the other investors?  Tomorrow is the end of the month & quarter and the S&P is up small for the month (~ 40 bips) but big for the quarter (~7.3%).  If the technical traders are looking to influence other investors, they are banking on equity managers chasing the tape into the month-end/quarter-end.

I’ve been focusing on near-term catalysts to guess the changes in sentiment.  The next major catalyst on the calendar is the October 5th release of September nonfarm payrolls data (+190k est vs +201k prior).  The Fed’s hiking path seems to be pretty certain but if there’s a wrinkle coming, payrolls data will be key.

The economy is on rails and the surprises of late are small and inconsequential.  It would take an outlier to move the market meaningfully and it would probably take a couple of outliers to shatter the generally bullish psychology of investors.

There’s a lot of sentimental stability out there.